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What changed in Xenia Hotels & Resorts, Inc.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Xenia Hotels & Resorts, 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.

+336 added−364 removedSource: 10-K (2024-02-27) vs 10-K (2023-03-02)

Top changes in Xenia Hotels & Resorts, Inc.'s 2023 10-K

336 paragraphs added · 364 removed · 275 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

33 edited+3 added−5 removed77 unchanged
Biggest changeWe may also issue new equity or debt and use the proceeds from such issuances to acquire assets, make capital improvements that yield attractive risk-adjusted returns on investment, or for general corporate purposes. We maintain an "at-the-market" program (the "ATM program") available for selling common stock with an aggregate gross offering price of up to $200 million.
Biggest changeAs of December 31, 2023, the Company had approximately $133.7 million remaining under its share repurchase authorization. We may also issue new equity or debt and use the proceeds from such issuances to acquire assets, make capital improvements that yield attractive risk-adjusted returns on investment, or for general corporate purposes.
Variability of results through some of the cycles in the past has been more severe due to changes in the supply of hotel rooms in given markets or in given segments of hotels. The combination of changes in economic conditions and in the supply of hotel rooms can cause significant volatility in results for owners of hotel properties.
The variability of results through some of the cycles in the past has been more severe due to changes in the supply of hotel rooms in given markets or in given segments of hotels. The combination of changes in economic conditions and in the supply of hotel rooms can cause significant volatility in results for owners of hotel properties.
We conduct our business through a traditional umbrella partnership real estate investment trust, or UPREIT, in which our hotels are indirectly owned by our Operating Partnership, through subsidiary limited partnerships, limited liability companies or other legal entities.
We conduct our business through a traditional umbrella partnership real estate investment trust ("UPREIT"), in which our hotels are indirectly owned by our Operating Partnership, through subsidiary limited partnerships, limited liability companies or other legal entities.
In addition, our project management team has extensive experience in the development and renovation of hotel properties, providing both in-depth knowledge of building construction, as well as the opportunity for us to evaluate potential development opportunities. We view this as a significant competitive strength relative to many of our peers. - Strategic Capital Investment to Enhance Portfolio Performance.
In addition, our project management team has extensive experience in the development and renovation of hotel properties, providing 2 both in-depth knowledge of building construction, as well as the opportunity for us to evaluate potential development opportunities. We view this as a significant competitive strength relative to many of our peers. - Strategic Capital Investment to Enhance Portfolio Performance.
Our benefit programs include an employee stock grant program, health plan options with generous cost-sharing and health savings account contributions, dental, vision, life and disability insurance, a retirement plan with matching employer contributions, tuition reimbursements, qualified parking benefits, significant amounts of paid time off and a remote work policy.
Our benefit programs include an employee stock grant program, health plan options with generous cost-sharing and health savings account contributions, dental, vision, life and disability insurance, a retirement plan with matching employer contributions, tuition reimbursements, qualified parking benefits, significant amounts of paid time off and a hybrid remote work policy.
We interact frequently with our management companies and on-site management personnel, including conducting regular meetings with key executives of our management companies and brands. We work to maximize the value of our assets through all aspects of the hotel operation and ancillary real estate opportunities. 2 - In-House Project Management.
We interact frequently with our management companies and on-site management personnel, including conducting regular meetings with key executives of our management companies and brands. We work to maximize the value of our assets through all aspects of the hotel operation and ancillary real estate opportunities. - In-House Project Management.
Subject to market conditions, we intend to repay amounts outstanding under our revolving credit facility and/or other debt from time to time with proceeds from periodic common and preferred equity issuances, long-term debt financings, sale of assets and cash flows from operations. Competition The U.S. lodging industry is highly competitive.
Subject to market conditions, we intend to repay amounts outstanding under our revolving line of credit and/or other debt from time to time with proceeds from periodic common and preferred equity issuances, long-term debt financings, sale of assets and cash flows from operations. Competition The U.S. lodging industry is highly competitive.
The remaining 3.0% of the Operating Partnership Units are owned by the other limited partners comprised of certain of our executive officers and current or former members of our Board of Directors and includes vested and unvested long-term incentive plan ("LTIP") partnership units.
The remaining 3.6% of the Operating Partnership Units are owned by the other limited partners comprised of certain of our executive officers and current or former members of our Board of Directors and includes vested and unvested long-term incentive plan ("LTIP") partnership units.
Our debt includes a revolving credit facility, a corporate credit facility term loan, the Senior Notes, mortgage loans collateralized by our hotel properties, or leasehold interests under the ground leases on our hotel properties, and may include other types of private and public debt in the future.
Our debt includes a revolving line of credit, corporate credit facility term loans, the Senior Notes, mortgage loans collateralized by certain of our hotel properties, or leasehold interests under the ground leases on our hotel properties and may include other types of private and public debt in the future.
The Company's subsidiaries generally consist of limited liability companies ("LLCs"), limited partnerships ("LPs") and our TRS. The effects of all inter-company transactions are eliminated. As of December 31, 2022, the Company owned 32 lodging properties with a total of 9,508 rooms. The Company’s principal executive offices are located at 200 S.
The Company's subsidiaries generally consist of limited liability companies ("LLCs"), limited partnerships ("LPs") and our TRS. The effects of all inter-company transactions are eliminated. As of December 31, 2023, the Company owned 32 lodging properties with a total of 9,514 rooms. The Company’s principal executive offices are located at 200 S.
In January 2023, XHR LP (the "Borrower") entered into a new $675 million senior unsecured credit facility comprised of a $450 million revolving line of credit (the “Revolving Line of Credit”), a $125 million term loan (the "Term Loan $125M") and a $100 million delayed draw term loan (the “Term Loan $100M” and, together with the Term Loan $125M, the "2023 Term Loans") pursuant to a Revolving Credit and Term Loan Agreement, dated as of January 10, 2023, by and among the Borrower, JPMorgan Chase Bank, N.A., as administrative agent, and the lenders and other parties thereto (the “2023 Credit Agreement”).
In January 2023, XHR LP (the "Borrower") entered into a new $675 million senior unsecured credit facility comprised of a $450 million revolving line of credit (the “revolving line of credit”), a $125 million initial term loan (the "2023 Initial Term Loan") and a $100 million delayed draw term loan (the “2023 Delayed Draw Term Loan” and, together with the 2023 Initial Term Loan, the "2023 Term Loans") pursuant to a Revolving Credit and Term Loan Agreement, dated as of January 10, 2023, by and among the Borrower, JPMorgan Chase Bank, N.A., as administrative agent, and the lenders and other parties party thereto (the “2023 Credit Agreement”).
Human Capital Corporate Employees As of December 31, 2022, we had 43 employees. None of our employees are represented by a labor union or covered by a collective bargaining agreement. We are guided by our core values, which include civility, ethics and integrity, and a commitment to quality.
Human Capital Corporate Employees As of December 31, 2023, we had 45 employees. None of our employees are represented by a labor union or covered by a collective bargaining agreement. We are guided by our core values, which include civility, ethics and integrity, and a commitment to quality.
There is a history of increases and decreases in demand for and supply of hotel rooms, in occupancy levels and in rates realized by owners of hotels through economic cycles and as a result of periodic demand shocks due to economic or other events outside of the lodging industry, such as the impact of the COVID-19 pandemic on operating results in 2020, 2021 and 2022.
There is a history of increases and decreases in demand for and supply of hotel rooms, in occupancy levels and in rates realized by owners of hotels through economic cycles and as a result of periodic demand shocks due to economic or other events outside of the lodging industry, such as the impact that COVID-19 had on operating results.
We own and control 100% of the sole general partner of our Operating Partnership and own, directly or indirectly, approximately 97.0% of the Operating Partnership Units in our Operating Partnership, with the remaining 3.0% owned by certain of our executive officers and current or former members of our Board of Directors.
We own and control 100% of the sole general partner of our Operating Partnership and own, directly or indirectly, approximately 96.4% of the Operating Partnership Units in our Operating Partnership, with the remaining 3.6% owned by certain of our executive officers and current or former members of our Board of Directors.
Our weighted-average debt maturity as of December 31, 2022 was 2.8 years for our mortgage loans, 4.2 years for our corporate credit facility term loan, the Senior Notes, and revolving credit facility and 3.9 years for all debt. Our total debt had a weighted-average interest rate of 5.65%.
Our weighted-average debt maturity as of December 31, 2023 was 3.2 years for our mortgage loans, 3.3 years for our corporate credit facility term loans, the Senior Notes, and revolving line of credit and 3.3 years for all debt. Our total debt had a weighted-average interest rate of 5.47%.
Our TRS, which owns our TRS lessees, is subject to U.S. federal, state and local income taxes applicable to corporations and we are generally subject to sales tax on a portion of the rent paid from our TRS lessees.
Our TRS lessees pay rent to us that we intend to treat as "rents from real property." Our TRS, which owns our TRS lessees, is subject to U.S. federal, state and local income taxes applicable to corporations and we are generally subject to sales tax on a portion of the rent paid from our TRS lessees.
Additionally, in January 2023, we amended the mortgage loan collateralized by Andaz Napa to update the variable index on the $55 million loan from LIBOR-based to Term SOFR and extend the maturity date through January 2028.
Additionally, in January 2023, we amended the mortgage loan collateralized by Andaz Napa to update the variable index from one-month LIBOR to Term SOFR, increase the credit spread, increase the principal amount to $55 million and extend the maturity date through January 2028.
Employees at certain of our third-party managed hotels are covered by collective bargaining agreements that are subject to review and 6 renewal on a regular basis.
Hotel Employees All persons employed in the day-to-day operations of our hotels are employees of our third-party managers. Employees at certain of our third-party managed hotels are covered by collective bargaining agreements that are subject to review and 6 renewal on a regular basis.
As required for our qualification as a REIT, our TRS lessees have engaged third-party hotel management companies that are eligible independent contractors to manage our hotels on market terms. Our TRS lessees pay rent to us that we intend to treat as "rents from real property".
As required for our qualification as a REIT, our TRS lessees have engaged third-party hotel management companies that are eligible independent contractors to manage our hotels on market terms.
We may issue equity under this program or other equity issuance programs if we determine that shares can be sold at an attractive price and there is a compelling use for such proceeds.
We had $200 million available for issuance under the ATM Agreement as of December 31, 2023. We may issue equity under this program or other equity issuance programs if we determine that shares can be sold at an attractive price and there is a compelling use for such proceeds.
The costs of running a hotel tend to be more fixed than variable. Because of this, in an environment of declining revenues the rate of decline in earnings will be higher than the rate of decline in revenues.
In a stable macroeconomic environment, the costs of running a hotel tend to be more fixed than variable. Because of this, when revenues decline the rate of decline in earnings will be higher than the rate of decline in revenues. Conversely, the rate of increase in earnings is typically higher than the rate of increase in revenues.
The Revolving Line of Credit and the Term Loan $125M refinanced in full our existing corporate credit facilities, and as a result of such refinancing, the pledges of equity of certain subsidiaries securing obligations under the Amended Credit Agreements and the Senior Notes were released.
The revolving line of credit and the 2023 Initial Term Loan refinanced in full the then existing corporate credit facilities, and as a result of such refinancing, the then existing pledges of equity of certain subsidiaries securing obligations under the Company's prior corporate credit facilities were released.
As of December 31, 2022, the Company collectively owned 97.0% of the common limited partnership units issued by the Operating Partnership ("Operating Partnership Units").
As of December 31, 2023, the Company collectively owned 96.4% of the common limited partnership units issued by the Operating Partnership ("Operating Partnership Units").
We are also committed to cultivating our employees through training and development, including leadership training, professional certifications, continuing education and professional memberships, performance management through annual performance reviews and feedback, health and wellness programs and team-building programs.
We are also committed to cultivating our employees through training and development, including leadership training, professional certifications, continuing education and professional memberships, performance management through annual performance reviews and feedback, health and wellness programs and team-building programs. We have also been recognized as one of America's Most Responsible Companies by Newsweek.
As of December 31, 2022, we had a total of $365.9 million of cash on hand, including $60.8 million of restricted cash primarily set aside to maintain our hotels.
As of December 31, 2023, we had a total of $223.1 million of cash on hand, including $58.4 million of restricted cash primarily set aside to maintain our hotels.
The Revolving Line of Credit matures in January 2027 and can be extended up to an additional year. The interest rate on the Revolving Line of Credit is based on a pricing grid with a range of 145 to 275 basis points over the applicable Term SOFR rate as determined by the Company’s leverage ratio.
The interest rate on the revolving line of credit is based on a pricing grid with a range of 145 to 275 basis points over the applicable Term SOFR rate as determined by the Company’s leverage ratio, subject to a 10-basis point credit spread adjustment and a zero basis point floor.
As of December 31, 2022, our corporate workforce was comprised of approximately 42% women and 40% underrepresented ethnic and racial groups and 72% were 40 years of age or older with an average age of 47.
As of December 31, 2023, 33% of our corporate workforce identified as women and 40% as underrepresented ethnic and racial groups. Further, 73% of our corporate workforce were 40 years of age or older with an average age of 48.
Business Objectives and Growth Strategies Our objective is to allocate capital in order to invest primarily in a high-quality diversified portfolio of uniquely positioned luxury and upper upscale hotels and resorts with a focus on the top 25 lodging markets as well as key leisure destinations in the United States.
The following chart shows our structure as of December 31, 2023: (1) Ownership percentages include vested and unvested LTIP partnership units which may or may not vest based on the passage of time and meeting certain market-based performance objectives. 1 Business Objectives and Growth Strategies Our objective is to allocate capital in order to invest primarily in a high-quality diversified portfolio of uniquely positioned luxury and upper upscale hotels and resorts with a focus on the top 25 lodging markets as well as key leisure destinations in the United States.
Conversely, in an environment of increasing demand and room rates, the rate of increase in earnings is typically higher than the rate of increase in revenues. Regulations General Our hotels are subject to various U.S. federal, state and local laws, ordinances and regulations, including regulations relating to common areas and fire and safety requirements.
Regulations General Our hotels are subject to various U.S. federal, state and local laws, ordinances and regulations, including regulations relating to common areas and fire and safety requirements.
The Term Loan $100M was funded on January 17, 2023 and was used to repay in full the mortgage loan collateralized by Renaissance Atlanta Waverly Hotel & Convention Center that was due August 2024. Proceeds from future Revolving Line of Credit borrowings may be used for working capital, general corporate or other purposes permitted by the 2023 Credit Agreement.
The 2023 Delayed Draw Term Loan was funded on January 17, 2023 and was used to repay in full the mortgage loan collateralized by Renaissance Atlanta Waverly Hotel & Convention Center that was due August 2024.
In a stable macroeconomic environment, our revenues and operating income have historically been highest in the second quarter of the year followed by the first, third and fourth quarters. The impact of the COVID-19 pandemic and continuing recovery has and may continue to disrupt our historical seasonal patterns.
In a stable macroeconomic environment, our revenues and operating income have historically been highest in the second quarter of the year followed by the first, third and fourth quarters. Cyclicality The lodging industry is cyclical and generally its growth or contraction follows the overall economy.
The Repurchase Program does not have an expiration date. This Repurchase Program may be suspended or discontinued at any time and does not obligate the Company to acquire any particular amount of shares. As of December 31, 2022, the Company had approximately $166.5 million remaining under its share repurchase authorization.
Such repurchases, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. The Repurchase Program does not have an expiration date. This Repurchase Program may be suspended or discontinued at any time and does not obligate the Company to acquire any particular amount of shares.
From time to time we may sell shares under the ATM program to raise capital when we believe conditions are advantageous. 3 The ATM program was upsized in May 2021 and had $200 million available for sale as of December 31, 2022.
From time to time, we may sell shares under the ATM program pursuant to an Equity Distribution Agreement ("ATM Agreement") with Wells Fargo Securities, LLC, Robert W. Baird & Co. Incorporated, 3 Jefferies LLC, KeyBanc Capital Markets Inc. and Raymond James & Associates, Inc. to raise capital when we believe conditions are advantageous.
Removed
The following chart shows our structure as of December 31, 2022: (1) Ownership percentages include vested and unvested LTIP partnership units which may or may not vest based on the passage of time and meeting certain market-based performance objectives. 1 Ongoing Recovery from COVID-19 Our hotel portfolio experienced a broad-based recovery from COVID-19 during 2022 with a continuation of strong leisure bookings and an acceleration of business transient and group demand.
Added
Proceeds from future revolving line of credit borrowings may be used for working capital, general corporate or other purposes permitted by the 2023 Credit Agreement. The revolving line of credit matures in January 2027 and can be extended up to an additional year.
Removed
As the recovery continues, we expect that the pace will vary from market to market and may be uneven in nature.
Added
Our Board of Directors has authorized a stock repurchase program pursuant to which we are authorized to repurchase our common stock, par value $0.01 per share, in the open market, in privately negotiated transactions or otherwise, including pursuant to Rule 10b5-1 plans (the "Repurchase Program").
Removed
In November 2022, the Board of Directors approved an increase to the share repurchase authorization amount by $100 million, thereby increasing our authorization to repurchase up to $275 million of the Company's outstanding common stock (the "Repurchase Program"). Such repurchases, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors.
Added
We maintain an At-The-Market ("ATM") program available for selling common stock with an aggregate gross offering price of up to $200 million. In August 2023, the then existing registration statement expired and as a result, the Company wrote off accumulated offering costs of $1.2 million and filed a new registration statement.
Removed
Cyclicality The lodging industry is cyclical and generally its growth or contraction follows the overall economy.
Removed
We have also been recognized as one of America's Most Responsible Companies by Newsweek and by the Orlando Sentinel as a Top 100 Workplace. Hotel Employees All persons employed in the day-to-day operations of our hotels are employees of our third-party managers.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

79 edited+15 added−12 removed385 unchanged
Biggest changeRefer to the following pages of this section for additional details regarding these summarized risk factors and other additional risk factors identified by the Company. • The COVID-19 pandemic has had a material adverse impact on the travel, lodging and hospitality industries and, as a result, our business, results of operations, cash flows and financial condition, and the impacts of the pandemic may persist or become more pronounced in the future as the pace and evenness of the recovery remains uncertain. • We may be adversely affected by various operating risks common to the lodging industry, including a dependence on business travel and tourism. • Difficult economic conditions may continue to adversely affect the hotel industry. • The lodging industry is highly cyclical in nature. • Changes in distribution channels, including the increasing use of intermediaries by consumers and companies may adversely affect our profitability. • The majority of our hotels operate under the Marriott and Hyatt brand families; therefore, we are subject to risks associated with concentrating our portfolio in two brand families. • We have a concentration of hotels in Texas, California, and Florida, which exposes our business to the effects of regional events and occurrences. • Our long-term growth depends in part on successfully identifying and consummating acquisitions of additional hotels and the failure to make such acquisitions could materially impede our growth. • We may be subject to unknown or contingent liabilities related to recently acquired hotels and the hotels that we may acquire in the future or hotels recently divested or that we may divest in the future. • The acquisition and/or disposition of a hotel or a portfolio of hotels is typically subject to contingencies, risks and uncertainties, any of which may cause us to be unsuccessful in completing the acquisition and/or disposition. • Many real estate costs and certain hotel operating costs are fixed, even if revenue from our hotels decreases. • The land underlying three of our hotels and/or meeting facilities is subject to a ground lease; if we are found to be in breach of a ground lease or are unable to renew a ground lease, we could be materially and adversely affected. • Several of our hotels are subject to condominium regimes or master associations with conditions, covenants, and restrictions placed on our properties; therefore, we are subject to risks associated with this type of real estate ownership. • We will not recognize any increase in the value of the land subject to our ground leases and may only receive a portion of compensation paid in any eminent domain proceeding with respect to the hotel. • Any difficulties in obtaining capital necessary to make required periodic capital expenditures and renovation of our hotels could materially and adversely affect our financial condition and results of operations. • We are subject to risks associated with the employment of hotel personnel, particularly with hotels that employ or may employ unionized labor. • We are dependent on the performance of the third-party hotel management companies and could be materially and adversely affected if such third-party managers do not properly manage our hotels or act in our best interests. • Restrictive covenants in certain of our hotel management and franchise agreements contain provisions limiting or restricting the sale of our hotels, which could materially and adversely affect our profitability. • Contractual and other disagreements with or involving third-party hotel management companies and franchisors could make us liable to them or result in litigation costs or other expenses. • If third-party hotel managers and/or franchisors consolidate through merger and acquisition transactions, we may experience undefined and unknown costs related to the integration of processes and systems. • If we were to lose a brand license at one or more of our hotels, the value of the affected hotels could decline significantly and we could incur significant costs to obtain new franchise licenses. • Volatility in the financial markets and challenging economic conditions could adversely affect our ability to secure debt financing on attractive terms and our ability to service any future indebtedness that we may incur. • Our organizational documents have no limitation on the amount of indebtedness we may incur.
Biggest changeRefer to the following pages of this section for additional details regarding these summarized risk factors and other additional risk factors identified by the Company. • We may be adversely affected by various operating risks common to the lodging industry, including a dependence on business travel and tourism. • Risks related to natural or man-made disasters, weather and climate-related events, contagious diseases, such as the COVID-19 pandemic, terrorist activity, and war could reduce the demand for lodging, which may adversely affect our financial condition and results of operations. • Difficult economic conditions may continue to adversely affect the hotel industry. • The lodging industry is highly cyclical in nature. • Changes in distribution channels, including the increasing use of intermediaries by consumers and companies may adversely affect our profitability. • The majority of our hotels operate under the Marriott and Hyatt brand families; therefore, we are subject to risks associated with concentrating our portfolio in two brand families. • We have a concentration of hotels in Texas, California, and Florida, which exposes our business to the effects of regional events and occurrences. • Our long-term growth depends in part on successfully identifying and consummating acquisitions of additional hotels and the failure to make such acquisitions could materially impede our growth. • We may be subject to unknown or contingent liabilities related to recently acquired hotels and the hotels that we may acquire in the future or hotels recently divested or that we may divest in the future. • The acquisition and/or disposition of a hotel or a portfolio of hotels is typically subject to contingencies, risks and uncertainties, any of which may cause us to be unsuccessful in completing the acquisition and/or disposition. • Many real estate costs and certain hotel operating costs are fixed, even if revenue from our hotels decreases. • The land underlying three of our hotels and/or meeting facilities is subject to a ground lease; if we are found to be in breach of a ground lease or are unable to renew a ground lease, we could be materially and adversely affected. • Several of our hotels are subject to condominium regimes or master associations with conditions, covenants, and restrictions placed on our properties; therefore, we are subject to risks associated with this type of real estate ownership. • We will not recognize any increase in the value of the land subject to our ground leases and may only receive a portion of compensation paid in any eminent domain proceeding with respect to the hotel. • Any difficulties in obtaining capital necessary to make required periodic capital expenditures and renovation of our hotels could materially and adversely affect our financial condition and results of operations. • We are subject to risks associated with the employment of hotel personnel, particularly with hotels that employ or may employ unionized labor. • We are dependent on the performance of the third-party hotel management companies and could be materially and adversely affected if such third-party managers do not properly manage our hotels or act in our best interests. • Restrictive covenants in certain of our hotel management and franchise agreements contain provisions limiting or restricting the sale of our hotels, which could materially and adversely affect our profitability. • Contractual and other disagreements with or involving third-party hotel management companies and franchisors could make us liable to them or result in litigation costs or other expenses. • If third-party hotel managers and/or franchisors consolidate through merger and acquisition transactions, we may experience undefined and unknown costs related to the integration of processes and systems. • If we were to lose a brand license at one or more of our hotels, the value of the affected hotels could decline significantly and we could incur significant costs to obtain new franchise licenses. • Volatility in the financial markets and challenging economic conditions could adversely affect our ability to secure debt financing on attractive terms and our ability to service any future indebtedness that we may incur. • Our organizational documents have no limitation on the amount of indebtedness we may incur.
In addition, we will be subject to a 4% nondeductible excise tax if the actual amount that we distribute to our stockholders in a calendar year is less than a minimum amount specified under the Code.
In addition, we will be subject to a 4% nondeductible excise tax if the actual amount that we distribute to our stockholders in a calendar year is less than the minimum amount specified under the Code.
To the extent that we satisfy this distribution requirement, but distribute less than 100% of our REIT taxable income, we will be subject to U.S. federal corporate income tax on our undistributed taxable income.
To the extent that we satisfy this distribution requirement but distribute less than 100% of our REIT taxable income, we will be subject to U.S. federal corporate income tax on our undistributed taxable income.
Certain provisions of the Maryland General Corporation Law, or "MGCL", may have the effect of deterring a third-party from making a proposal to acquire us or of impeding a change in our control under circumstances that otherwise could provide the holders of our common stock with the opportunity to realize a premium over the then-prevailing market price of our common stock, including: • "business combination" provisions that, subject to limitations, prohibit certain business combinations between us and an "interested stockholder" (defined generally as any person who beneficially owns, directly or indirectly, 10% or more of the voting power of our outstanding voting stock or an affiliate or associate of ours who was the beneficial owner, directly or indirectly, of 10% or more of the voting power of our then outstanding voting stock at any time within the two-year period immediately prior to the date in question) for five years after the most recent 31 date on which the stockholder becomes an interested stockholder, and thereafter impose fair price and/or super majority stockholder voting requirements on these combinations; and • "control share" provisions that provide that "control shares" of our company (defined as voting shares that, when aggregated with other shares controlled by the stockholder, entitle the stockholder to exercise one of three increasing ranges of voting power in electing directors) acquired in a "control share acquisition" (defined as the direct or indirect acquisition of ownership or control of issued and outstanding control shares) have no voting rights except to the extent approved by our stockholders by the affirmative vote of at least two-thirds of all the votes entitled to be cast on the matter, excluding all interested shares.
Certain provisions of the Maryland General Corporation Law, or "MGCL", may have the effect of deterring a third-party from making a proposal to acquire us or of impeding a change in our control under circumstances that otherwise could provide the holders of our common stock with the opportunity to realize a premium over the then-prevailing market price of our common stock, including: • "business combination" provisions that, subject to limitations, prohibit certain business combinations between us and an "interested stockholder" (defined generally as any person who beneficially owns, directly or indirectly, 10% 31 or more of the voting power of our outstanding voting stock or an affiliate or associate of ours who was the beneficial owner, directly or indirectly, of 10% or more of the voting power of our then outstanding voting stock at any time within the two-year period immediately prior to the date in question) for five years after the most recent date on which the stockholder becomes an interested stockholder, and thereafter impose fair price and/or super majority stockholder voting requirements on these combinations; and • "control share" provisions that provide that "control shares" of our company (defined as voting shares that, when aggregated with other shares controlled by the stockholder, entitle the stockholder to exercise one of three increasing ranges of voting power in electing directors) acquired in a "control share acquisition" (defined as the direct or indirect acquisition of ownership or control of issued and outstanding control shares) have no voting rights except to the extent approved by our stockholders by the affirmative vote of at least two-thirds of all the votes entitled to be cast on the matter, excluding all interested shares.
Other markets may experience prolonged variations in temperature or precipitation that limit access to the water needed to operate our hotel properties or significantly increase energy costs, which may subject those properties to additional regulatory burdens, such as limitations on water usage or stricter energy efficiency standards.
Other markets may experience prolonged variations in temperature or precipitation that limit access to the water needed to operate our hotel properties or significantly increase energy costs, which may subject those properties to additional regulatory burdens, such as limitations on water usage or stricter energy efficiency standards or limitations on energy usage.
These covenants place restrictions on, among other things, our ability to incur additional indebtedness, incur liens on assets, enter into new types of businesses, engage in mergers, liquidations or consolidations, sell assets, make restricted payments (including the payment of dividends and other distributions), enter into negative pledges or limitations on the ability of subsidiaries to make certain distributions or to guarantee the indebtedness under the credit agreements, engage in certain transactions with affiliates, enter into sale and leaseback transactions, make investments and capital expenditures, acquire real estate assets, enter into speculative hedging transactions, change our fiscal year and make certain payments and prepayments with respect to subordinated debt.
These covenants place restrictions on, among other things, our ability to incur additional indebtedness, incur liens on assets, enter into new types of businesses, engage in mergers, liquidations or 22 consolidations, sell assets, make restricted payments (including the payment of dividends and other distributions), enter into negative pledges or limitations on the ability of subsidiaries to make certain distributions or to guarantee the indebtedness under the credit agreements, engage in certain transactions with affiliates, enter into sale and leaseback transactions, make investments and capital expenditures, acquire real estate assets, enter into speculative hedging transactions, change our fiscal year and make certain payments and prepayments with respect to subordinated debt.
Further, our Board of Directors may classify or reclassify any unissued shares of common or preferred stock into other classes or series of 32 stock and establish the preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends and other distributions, qualifications, and terms or conditions of redemption of the stock and may amend our charter from time to time to increase or decrease the aggregate number of shares or the number of shares of any class or series that we have authority to issue without stockholder approval.
Further, our Board of Directors may classify or reclassify any unissued shares of common or preferred stock into other classes or series of stock and establish the preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends and other distributions, qualifications, and terms or conditions of redemption of the stock and may amend our charter from time to time to increase or decrease the aggregate number of shares or the number of shares of any class or series that we have authority to issue without stockholder approval.
The concentration of hotels in a certain region may expose us to risks of adverse legislation or economic developments, such as unfavorable treatment from state authorities, negative trends in the industry sectors that are concentrated in these markets and more severe restrictions 12 related to health and safety measures, that are greater than if our portfolio were more geographically diverse.
The concentration of hotels in a certain region may expose us to risks of adverse legislation or economic developments, such as unfavorable treatment from state authorities, negative trends in the industry sectors that are concentrated in these markets and more severe restrictions related to health and safety measures, that are greater than if our portfolio were more geographically diverse.
In addition, travelers can book stays on websites that facilitate the short-term rental of homes and apartments from owners, thereby providing an alternative to hotel rooms. We also compete for hotel acquisitions with others that have similar investment objectives as we do. This competition could limit the number of suitable investment opportunities offered to us.
In addition, travelers can book stays on websites that facilitate the short-term rental of homes and apartments from owners, thereby providing an alternative to hotel rooms. 11 We also compete for hotel acquisitions with others that have similar investment objectives as we do. This competition could limit the number of suitable investment opportunities offered to us.
Our Board of Directors may authorize our senior management team to follow broad investment guidelines and has approved certain investment and financing guidelines, and as a result, we expect that our senior management team will have latitude, and in some instances, certain levels of discretion and authority in determining the assets that are proper investments for us, as well as the individual investment decisions, and how we finance such investments.
Our Board of Directors may authorize our senior management team to follow broad investment guidelines and has approved certain investment and financing guidelines, and as a result, we expect that our senior management team will have latitude, and in some instances, certain levels of discretion and authority in determining the assets that are proper investments for us, as well 33 as the individual investment decisions, and how we finance such investments.
We are subject to the risks associated with natural disasters and the physical effects of climate change, which may include more frequent and/or severe storms, hurricanes, flooding, freeze events, rising sea levels, shortages of water, droughts and wildfires, any of which could have a material adverse effect on our properties, operations and business.
We are subject to the risks associated with natural disasters and the physical effects of climate change, which may include more frequent and/or severe storms, hurricanes, flooding, freeze events, heatwaves, rising sea levels, shortages of water, droughts and wildfires, any of which could have a material adverse effect on our properties, operations and business.
We can provide no assurances that we will be successful in identifying attractive hotels or that, once identified, we will be successful in consummating an acquisition. We face significant competition for attractive investment opportunities from other well-capitalized investors, some of which have greater financial resources and a greater access to debt and equity capital to acquire hotels than we do.
We can provide no assurances that we will be successful in identifying attractive hotels or that, once identified, we will be successful in consummating an acquisition. We face significant competition for attractive investment opportunities from other well-capitalized investors, some of which have greater financial resources and greater access to debt and equity capital to acquire hotels than we do.
Our hotels compete with other hotels and alternative accommodations (e.g. websites that facilitate the short-term rentals of homes and apartments from owners, including some operated by affiliates of our Brand 11 Companies) based on a number of factors, including room rates, quality of accommodations, service levels and amenities, location, brand affiliation, reputation and reservation systems.
Our hotels compete with other hotels and alternative accommodations (e.g. websites that facilitate the short-term rentals of homes and apartments from owners, including some operated by affiliates of our Brand Companies) based on a number of factors, including room rates, quality of accommodations, service levels and amenities, location, brand affiliation, reputation and reservation systems.
Many costs, such as real estate taxes, insurance premiums, maintenance costs and certain hotel operating costs generally are more fixed than variable and as a result, are not reduced even when a hotel is not fully occupied, when operations have been 13 suspended, when room rates decrease or other circumstances cause a reduction in revenues.
Many costs, such as real estate taxes, insurance premiums, maintenance costs and certain hotel operating costs generally are more fixed than variable and as a result, are not reduced even when a hotel is not fully occupied, when operations have been suspended, when room rates decrease or other circumstances cause a reduction in revenues.
Additionally, our business is exposed to risks associated with societal efforts to mitigate or respond to climate change, including but not limited to regulatory developments and changes in market demand. For example, some state and local governments have adopted, or considered adopting, restrictions on water use or GHG emissions.
Additionally, our business is exposed to risks associated with societal efforts to mitigate or respond to climate change, including but not limited to regulatory developments and changes in market demand. For example, some state and local governments 35 have adopted, or considered adopting, restrictions on water use or GHG emissions.
In addition, our organizational documents contain no limitations on the amount of debt that we may incur, and our Board of Directors may change our financing policy at any time without stockholder notice or 20 approval. As a result, we may be able to incur substantial additional debt, including secured debt, in the future.
In addition, our organizational documents contain no limitations on the amount of debt that we may incur, and our Board of Directors may change our financing policy at any time without stockholder notice or approval. As a result, we may be able to incur substantial additional debt, including secured debt, in the future.
Conflicts of interest could arise as a result of the relationships between us and our affiliates, on the one hand, and our Operating Partnership or any partner thereof, on the other. Our directors and officers who own interest in our Operating Partnership have duties to us under applicable Maryland law in connection with their management of our company.
Conflicts of interest could arise as a result of the relationships between us and our affiliates, on the one hand, and our Operating Partnership or any partner thereof, on the other. Our directors and officers who own interests in our Operating Partnership have duties to us under applicable Maryland law in connection with their management of our company.
We may also borrow money for other purposes to, among other things, satisfy the requirement that we distribute at least 90% of our REIT taxable income, subject to certain adjustments, or as is otherwise necessary or advisable to assure that we continue to qualify as a REIT for U.S. federal income tax purposes.
We may also borrow money for other purposes to, among other things, satisfy the requirement that we distribute at least 90% of our REIT taxable income, subject to certain adjustments, or as is otherwise necessary or advisable to assure that we continue to qualify as a REIT for U.S. 21 federal income tax purposes.
In many cases, mortgage lenders insist that 36 commercial property owners purchase coverage against terrorism as a condition of providing mortgage loans. Such insurance policies may not be available at a reasonable cost, which could inhibit our ability to finance or refinance our hotels.
In many cases, mortgage lenders insist that commercial property owners purchase coverage against terrorism as a condition of providing mortgage loans. Such insurance policies may not be available at a reasonable cost, which could inhibit our ability to finance or refinance our hotels.
In 21 addition, incurring mortgage debt increases the risk of loss since defaults on indebtedness secured by a property may result in lenders initiating foreclosure actions. In such a case, we could lose the property securing the loan that is in default, thus reducing the value of our investment.
In addition, incurring mortgage debt increases the risk of loss since defaults on indebtedness secured by a property may result in lenders initiating foreclosure actions. In such a case, we could lose the property securing the loan that is in default, thus reducing the value of our investment.
The credit agreements also contain financial covenants relating to our maximum total leverage ratio, maximum secured leverage ratio, maximum secured recourse leverage ratio, 22 minimum fixed charge coverage ratio, minimum consolidated tangible net worth, minimum unsecured interest coverage ratio, maximum unencumbered leverage ratio, and set a minimum number of unencumbered properties we must own and a minimum value for such unencumbered properties.
The credit agreements also contain financial covenants relating to our maximum total leverage ratio, maximum secured leverage ratio, maximum secured recourse leverage ratio, minimum fixed charge coverage ratio, minimum consolidated tangible net worth, minimum unsecured interest coverage ratio, maximum unencumbered leverage ratio, and set a minimum number of unencumbered properties we must own and a minimum value for such unencumbered properties.
These and other risks may reduce demand for our properties or otherwise result in adverse impacts to our business, financial condition, and results of operations. 35 Increasing attention to, and evolving expectations for, environmental, social, and governance matters may increase our costs, harm our reputation, or otherwise adversely impact our business.
These and other risks may reduce demand for our properties or otherwise result in adverse impacts to our business, financial condition, and results of operations. Increasing attention to, and evolving expectations for, environmental, social, and governance matters may increase our costs, harm our reputation, or otherwise adversely impact our business.
Even if a substantial number of issuances or sales of our shares are not affected, the mere perception of 29 the possibility of these sales could depress the market price of our common stock and have a negative effect on our ability to raise capital in the future.
Even if a substantial number of issuances or sales of our shares are not affected, the mere perception of the possibility of these sales could depress the market price of our common stock and have a negative effect on our ability to raise capital in the future.
Some of our hotels routinely handle and use hazardous or regulated substances and wastes as part of their operations, which substances and wastes are subject to regulation (e.g., swimming pool chemicals and cleaning solvents for on-site dry cleaners).
Some of our hotels routinely 34 handle and use hazardous or regulated substances and wastes as part of their operations, which substances and wastes are subject to regulation (e.g., swimming pool chemicals and cleaning solvents for on-site dry cleaners).
Additionally, we cannot assure you that the amount of hurricane, windstorm, earthquake, flood or other casualty insurance maintained for these hotels from time to time would entirely cover damages caused by any such event.
Additionally, we cannot assure you that the amount of hurricane, windstorm, 12 earthquake, flood or other casualty insurance maintained for these hotels from time to time would entirely cover damages caused by any such event.
Our Board of Directors may not grant an exemption from these restrictions to any proposed transferee whose ownership in excess of 9.8% of the value of our outstanding shares would result in our failing to qualify as a REIT.
Our Board of Directors may not grant an 28 exemption from these restrictions to any proposed transferee whose ownership in excess of 9.8% of the value of our outstanding shares would result in our failing to qualify as a REIT.
Alternatively, we may choose not to close on 23 the acquisition of the property and default on the purchase contract. If we default on any purchase contract, we could lose our earnest deposit money and become subject to liquidated or other contractual damages and remedies.
Alternatively, we may choose not to close on the acquisition of the property and default on the purchase contract. If we default on any purchase contract, we could lose our earnest deposit money and become subject to liquidated or other contractual damages and remedies.
Furthermore, with respect to certain non-U.S. stockholders, we may be required to withhold U.S. federal income tax with respect to such dividends, including in respect of all or a portion of such dividend that is payable in common stock.
Furthermore, with respect to certain non- 27 U.S. stockholders, we may be required to withhold U.S. federal income tax with respect to such dividends, including in respect of all or a portion of such dividend that is payable in common stock.
Thus, common stockholders bear the risk that our future issuances of debt or equity securities or our incurrence of other borrowings will negatively affect the market price of our common stock. Your percentage ownership in us may be diluted in the future.
Thus, common stockholders bear the risk that our future issuances of debt or equity securities or our incurrence of other borrowings will negatively affect the market price of our common stock. 30 Your percentage ownership in us may be diluted in the future.
However, we cannot assure you that we will remain qualified as a REIT or that we will not be required to rely on a REIT "savings clause". If we were to rely on a REIT "savings clause", we would have to pay a penalty tax, which could be material.
However, we cannot assure you that we will remain 24 qualified as a REIT or that we will not be required to rely on a REIT "savings clause." If we were to rely on a REIT "savings clause", we would have to pay a penalty tax, which could be material.
Inflation, changes in building codes and ordinances, environmental considerations and other factors might also keep us from using insurance proceeds to replace or renovate a hotel after it has been damaged or destroyed.
Inflation, changes 36 in building codes and ordinances, environmental considerations and other factors might also keep us from using insurance proceeds to replace or renovate a hotel after it has been damaged or destroyed.
The remainder of our investment in securities (other than government securities and qualified real estate 26 assets) generally cannot include more than 10% of the outstanding voting securities of any one issuer or more than 10% of the total value of the outstanding securities of any one issuer.
The remainder of our investment in securities (other than government securities and qualified real estate assets) generally cannot include more than 10% of the outstanding voting securities of any one issuer or more than 10% of the total value of the outstanding securities of any one issuer.
Our Board of Directors has 30 approved an Incentive Award Plan (the "Plan"), which provides for the grant of cash and equity-based awards to our directors, officers, employees, and consultants.
Our Board of Directors has approved an Incentive Award Plan (the "Plan"), which provides for the grant of cash and equity-based awards to our directors, officers, employees, and consultants.
We may not be able to make distributions in the future or may need to consider various funding sources to cover any shortfall, including borrowing under the revolving credit facility, selling certain of our assets or using a portion of the net proceeds we receive from future offerings of equity, equity-related or debt securities or declaring taxable share dividends.
We may not be able to make distributions in the future or may need to consider various funding sources to cover any shortfall, including borrowing under the revolving line of credit, selling certain of our assets or using a portion of the net proceeds we receive from future offerings of equity, equity-related or debt securities or declaring taxable share dividends.
As a result, we could become subject to significant losses and/or repair costs that may not be fully covered by insurance.
As a result, we could become subject to significant losses, litigation and/or repair costs that may not be fully covered by insurance.
In addition, our failure to comply with these covenants, as well as our inability to make required payments under the credit agreements or any future debt agreement, could cause an event of default under the credit agreements, which, if not waived, could result in the termination of the financing commitments under the credit agreement governing our revolving credit facility and corporate credit facility term loan and the acceleration of the maturity of the outstanding indebtedness thereunder, or could cause an event of default under such future debt agreement, which could result in the acceleration of the debt and require us to repay such debt with capital obtained from other sources, which may not be available to us or may be available only on unattractive terms.
In addition, our failure to comply with these covenants, as well as our inability to make required payments under the credit agreements or any future debt agreement, could cause an event of default under the credit agreements, which, if not waived, could result in the termination of the financing commitments under the credit agreement governing our revolving line of credit and corporate credit facility term loans and the acceleration of the maturity of the outstanding indebtedness thereunder, or could cause an event of default under such future debt agreement, which could result in the acceleration of the debt and require us to repay such debt with capital obtained from other sources, which may not be available to us or may be available only on unattractive terms.
In addition, we expect to finance future acquisitions through a combination of borrowings under our revolving credit facility and corporate credit facility term loan, our mortgage loans, the use of retained cash flows and offerings of equity and debt securities, which may not be available on advantageous terms, or at all.
In addition, we expect to finance future acquisitions through a combination of borrowings under our revolving line of credit and corporate credit facility term loans, our mortgage loans, the use of retained cash flows and offerings of equity and debt securities, which may not be available on advantageous terms, or at all.
Additionally, certain disclosures or targets may be based on assumptions, estimates, hypothetical expectations, or third-party information, which are necessarily uncertain and may be prone to errors or subject to misinterpretation given the long timelines involved and the lack of an established single approach to identifying, measuring and reporting on many ESG matters.
Additionally, certain disclosures, targets, goals or commitments may be based on assumptions, estimates, hypothetical expectations, or third-party information, which are necessarily uncertain and may be prone to errors or subject to misinterpretation given the long timelines involved and the lack of an established single approach to identifying, measuring and reporting on many ESG matters.
If we fail to qualify as a REIT in any taxable year, we will face serious tax consequences because: • we would not be allowed a deduction for dividends paid to stockholders in computing our taxable income and would be subject to U.S. federal income tax at regular corporate rates; 24 • we could be subject to the U.S. federal alternative minimum tax for taxable years prior to 2018 and possibly increased state and local taxes; and • unless we are entitled to relief under certain U.S. federal income tax laws, we could not re-elect REIT status for the four taxable years following the year in which we failed to qualify as a REIT.
If we fail to qualify as a REIT in any taxable year, we will face serious tax consequences because: • we would not be allowed a deduction for dividends paid to stockholders in computing our taxable income and would be subject to U.S. federal income tax at regular corporate rates; • we could be subject to the U.S. federal alternative minimum tax and possibly increased state and local taxes; and • unless we are entitled to relief under certain U.S. federal income tax laws, we could not re-elect REIT status for the four taxable years following the year in which we failed to qualify as a REIT.
It is possible that the qualification of a transaction as a Section 1031 Exchange could be successfully challenged and determined to be currently taxable or that we may be unable to identify and complete the acquisition of a suitable replacement property to effect a Section 1031 Exchange. In such case, our taxable income and earnings and profits would increase.
It is possible that the qualification of a transaction as a Section 1031 Exchange could be successfully challenged and determined to be currently taxable or that we may be unable to identify and complete the acquisition of a suitable replacement property to affect a Section 1031 Exchange. In such case, our taxable income and earnings and profits would increase.
For example, expectations around company’s management of ESG matters continues to evolve rapidly, in many instances due to factors that are out of our control. While we commit to certain initiatives or goals, we may not ultimately be able to achieve them due to cost, technological, or other constraints.
For example, expectations around company’s management of ESG matters continues to evolve rapidly, in many instances due to factors that are out of our control. While we commit to certain initiatives or goals, we may not ultimately be able to achieve them due to cost, technological, or other constraints, including matters that are outside of our control.
As a result, our ability to fund capital expenditures or hotel redevelopment through retained earnings may be restricted. Consequently, we may have to draw down on our revolving credit facility, enter into new loans or rely upon the availability of new financing arrangements or equity capital to fund capital improvements.
As a result, our ability to fund capital expenditures or hotel redevelopment through retained earnings may be restricted. Consequently, we may have to draw down on our revolving line of credit, enter into new loans or rely upon the availability of new financing arrangements or equity capital to fund capital improvements.
Our continued ability to borrow under the revolving credit facility and any other credit facility that we may obtain will be subject to compliance with these covenants and our ability to meet these covenants will be adversely affected if U.S. lodging fundamentals do not continue to improve when and to the extent that we expect.
Our continued ability to borrow under the revolving line of credit and any other credit facility that we may obtain will be subject to compliance with these covenants and our ability to meet these covenants will be adversely affected if U.S. lodging fundamentals do not continue to improve when and to the extent that we expect.
To hedge against interest rate fluctuations, we may use derivative financial instruments that may be costly and ineffective. To the extent consistent with maintaining our qualification as a REIT, from time to time, we may use derivative financial instruments to hedge exposures to changes in interest rates on loans secured by our assets.
To hedge against interest rate fluctuations, we may use derivative financial instruments that may be costly and ineffective. To the extent consistent with maintaining our qualification as a REIT, from time to time, we may use derivative financial instruments to hedge exposure to changes in interest rates on loans secured by our assets.
Risks Related to Our Business and Strategy The majority of our hotels operate under the Marriott and Hyatt brand families; therefore, we are subject to risks associated with concentrating our portfolio in two brand families. In our portfolio, 23 of the 32 hotels that we owned as of December 31, 2022 operate under brands owned by Marriott and Hyatt.
Risks Related to Our Business and Strategy The majority of our hotels operate under the Marriott and Hyatt brand families; therefore, we are subject to risks associated with concentrating our portfolio in two brand families. In our portfolio, 23 of the 32 hotels that we owned as of December 31, 2023 operate under brands owned by Marriott and Hyatt.
We lease the land underlying three of our hotels and/or meeting facilities from third-parties as of December 31, 2022. Two of these hotels are subject to ground leases that cover all of the land underlying the respective hotel, and the third is subject to a ground lease that covers a portion of the land.
We lease the land underlying three of our hotels and/or meeting facilities from third-parties as of December 31, 2023. Two of these hotels are subject to ground leases that cover all of the land underlying the respective hotel, and the third is subject to a ground lease that covers a portion of the land.
Even if a substantial number of issuances or sales of shares of our common stock are not effected, the mere perception of the possibility of these sales could depress the market price of our common stock and have a negative effect on our ability to raise capital in the future.
Even if a substantial number of issuances or sales of shares of our common stock are not affected, the mere perception of the possibility of these sales could depress the market price of our common stock and have a negative effect on our ability to raise capital in the future.
In addition, our hotels will be subject to various operating risks common to the lodging industry, many of which are beyond our control, including, among others, the following: • changes in general macroeconomic conditions, including the severity and duration of any downturn in the U.S. or global economy and financial markets, inflationary pressures, rising interest rates and changes in consumer confidence levels; • outbreaks of pandemic or contagious diseases, such as COVID-19 (including new variants), norovirus, avian flu, severe acute respiratory syndrome (SARS), H1N1 (swine flu), Ebola, Zika virus, or other similar viruses, or fear of such outbreaks; • war, political conditions or uncertainty, terrorist activities or threats, mass casualty events, protests and heightened travel security measures instituted in response to these events; • natural disasters, such as earthquakes, tsunamis, tornadoes, hurricanes, typhoons, floods, droughts and wildfires, some of which may become more frequent and intense as a result of climate change, and man-made disasters, such as oil spills, terrorist attacks, and nuclear incidents; • chronic changes in physical conditions, such as sea-level rise or changes in temperature or precipitation patterns, which may impact the operating conditions of our hotels or other infrastructure we rely on; • delayed delivery or any material reduction or prolonged interruption of public utilities and services, including water and electric power; • decreased corporate or government travel-related budgets and spending and cancellations and/or government shutdowns or closures, deferrals or renegotiations of group business due to adverse changes in general economic conditions and/or changes in laws and regulations; • decreased demand for business-related travel due to innovations in business-related technology, such as for virtual meetings and/or conferences, ongoing corporate travel restrictions, and/or a permanent shift to work-from-home or flex arrangements; • changes in the desirability of particular locations or travel patterns of customers; • increasing awareness around sustainability, the impact of air travel on climate change and the impact of over-tourism; • low consumer confidence, high levels of unemployment or depressed real estate prices; • supply competition from other hotels and alternative accommodations in the markets in which we operate; • overbuilding of hotels in the markets in which we operate, which results in increased supply and will adversely affect occupancy and revenues at our hotels; 10 • requirements for periodic capital reinvestment to repair and upgrade hotels; • increases in operating costs due to inflation and other factors, including wages and benefits, that may not be offset by increased room rates; • change in interest rates and the availability, cost and terms of financing; • the financial condition and general business condition of the airline, automotive and other transportation-related industries and its impact on travel; • decreased airline capacities and routes and reductions in inbound foreign travel; • oil prices and travel costs; • increases in the cost of imported goods and materials, including those used for hotel renovations and other projects, due to changes in international tariffs and/or supply chain disruptions and/or shortages due to reductions in international imports; • statements, actions or interventions by governmental officials related to travel and corporate travel-related activities and the resulting negative public perception of such travel and activities; • government regulations which limit or prohibit hotels and resorts from charging certain types of bundled fees such as resort or destination amenity fees; and • risks generally associated with the ownership of hotels and real estate, as we discuss in detail below.
In addition, our hotels will be subject to various operating risks common to the lodging industry, many of which are beyond our control, including, among others, the following: • changes in general macroeconomic conditions, including the severity and duration of any downturn in the U.S. or global economy and financial markets, inflationary pressures, rising interest rates and changes in consumer confidence levels; 9 • outbreaks of pandemic or contagious diseases, such as COVID-19 (including new variants), norovirus, avian flu, severe acute respiratory syndrome (SARS), H1N1 (swine flu), Ebola, Zika virus, or other similar viruses, or fear of such outbreaks; • war, geopolitical conflicts, other political conditions or uncertainty, terrorist activities or threats, mass casualty events, protests and heightened travel security measures instituted in response to these events; • natural disasters, such as earthquakes, tsunamis, tornadoes, hurricanes, typhoons, floods, droughts, wildfires, and extreme weather events, some of which may become more frequent and intense as a result of climate change, and man-made disasters, such as oil spills, terrorist attacks, and nuclear incidents; • chronic changes in physical conditions, such as sea-level rise or changes in temperature or precipitation patterns, which may impact the operating conditions of our hotels or other infrastructure we rely on; • delayed delivery or any material reduction or prolonged interruption of public utilities and services, including water and electric power; • decreased corporate or government travel-related budgets and spending and cancellations and/or government shutdowns or closures, deferrals or renegotiations of group business due to adverse changes in general economic conditions and/or changes in laws and regulations; • decreased demand for business-related travel due to innovations in business-related technology, such as for virtual meetings and/or conferences, ongoing corporate travel restrictions, and/or a permanent shift to work-from-home or flex arrangements; • changes in the desirability of particular locations or travel patterns of customers; • increasing awareness around sustainability, the impact of air travel on climate change and the impact of over-tourism; • low consumer confidence, high levels of unemployment or depressed real estate prices; • supply competition from other hotels and alternative accommodations in the markets in which we operate; • overbuilding of hotels in the markets in which we operate, which results in increased supply and will adversely affect occupancy and revenues at our hotels; • requirements for periodic capital reinvestment to repair and upgrade hotels; • increases in operating costs due to inflation and other factors, including wages and benefits, that may not be offset by increased room rates; • change in interest rates and the availability, cost and terms of financing; • the financial condition and general business condition of the airline, automotive and other transportation-related industries and its impact on travel; • decreased airline capacities and routes and reductions in inbound foreign travel; • oil prices and travel costs; • increases in the cost of imported goods and materials, including those used for hotel renovations and other projects, due to changes in international tariffs and/or supply chain disruptions and/or shortages due to reductions in international imports; • statements, actions or interventions by governmental officials related to travel and corporate travel-related activities and the resulting negative public perception of such travel and activities; • government regulations which limit or prohibit hotels and resorts from charging certain types of bundled fees such as resort or destination amenity fees; and • risks generally associated with the ownership of hotels and real estate, as we discuss in detail below. 10 These factors, and the reputational repercussions of these factors, can materially adversely affect, and from time to time have adversely affected, individual hotels, particular regions and our business, financial condition, results of operations, and/or our ability to make distributions to our stockholders.
We have a concentration of hotels in Texas, California and Florida. Specifically, as of December 31, 2022, approximately 23%, 20%, and 12% of rooms in our portfolio were located in Texas, California and Florida, respectively.
We have a concentration of hotels in Texas, California and Florida. Specifically, as of December 31, 2023, approximately 23%, 20%, and 12% of rooms in our portfolio were located in Texas, California and Florida, respectively.
If third-party online travel agencies consolidate through merger and acquisitions this may lead to less negotiating power over contracts and/or higher costs of obtaining customers.
If third-party online travel agencies consolidate through mergers and acquisitions this may lead to less negotiating power over contracts and/or higher costs of obtaining customers.
In certain cases, we do not have a majority of votes on the condominium or association board, which result in the Company not having control of the related condominium or association.
In certain cases, we do not have a majority of votes on the condominium or association board, which results in the Company not having control of the related condominium or association.
The credit agreement governing our revolving credit facility and our corporate credit facility term loan as well as the indentures governing our Senior Notes contain customary covenants with which we must comply, which limit the discretion of management with respect to certain business matters.
The credit agreement governing our revolving line of credit and our corporate credit facility term loans as well as the indentures governing our Senior Notes contain customary covenants with which we must comply, which limit the discretion of management with respect to certain business matters.
We believe that we are qualified to be taxed as a REIT for U.S. federal income tax purposes for our taxable year ended December 31, 2022, and we intend to continue operating in such a manner.
We believe that we qualified to be taxed as a REIT for U.S. federal income tax purposes for our taxable year ended December 31, 2023, and we intend to continue operating in such a manner.
Qualified dividend income payable to U.S. investors that are individuals, trusts, and estates is subject to the reduced maximum tax rate applicable to long-term capital gains. Dividends payable by REITs, however, are generally not eligible for the reduced rates on qualified dividend income.
Dividends payable by REITs generally do not qualify for the reduced tax rates available for some dividends. Qualified dividend income payable to U.S. investors that are individuals, trusts, and estates is subject to the reduced maximum tax rate applicable to long-term capital gains. Dividends payable by REITs, however, are generally not eligible for the reduced rates on qualified dividend income.
In March 2018, we established our ATM program with a syndicate of five banks ("Agents"), pursuant to which we may sell, from time to time, up to an aggregate sales price on $200 million to or through the Agents. From time to time, we may refresh or implement a new at-the-market program.
In March 2018, we established our ATM program with a syndicate of five banks ("Agents"), pursuant to which we could sell, from time to time, up to an aggregate sales price of $200 million to or through the Agents. From time to time, we may refresh or implement a new ATM program.
Accordingly, we only own a long-term leasehold or similar interest in all or a portion of these three hotels. The average remaining term of the ground leases, assuming no renewal options are exercised, is approximately 36 years. Assuming all renewal options are exercised, the average remaining term is 69 years.
Accordingly, we only own a long-term leasehold or similar interest in all or a portion of these three hotels. The average remaining term of the ground leases, assuming no renewal options are exercised, is approximately 35 years. Assuming all renewal options are exercised, the average remaining term is 68 years.
We own 97.0% of the Operating Partnership Units and the remaining 3.0% of the Operating Partnership Units are owned by the other limited partners comprised of our executive officers and current or former members of our Board of Directors. However, in connection with our future acquisition of properties or otherwise, we may issue Operating Partnership Units to third-parties.
We own 96.4% of the Operating Partnership Units and the remaining 3.6% of the Operating Partnership Units are owned by the other limited partners comprised of our executive officers and current or former members of our Board of Directors. However, in connection with our future acquisition of properties or otherwise, we may issue Operating Partnership Units to third-parties.
As of December 31, 2022, approximately $279.2 million, or 19%, of our total debt outstanding, bore interest at variable rates which was not hedged by interest rate protection agreements. We may be contractually obligated to purchase property even if we are unable to secure financing for the acquisition.
As of December 31, 2023, approximately $280.0 million, or 20%, of our total debt outstanding, bore interest at variable rates which was hedged by interest rate protection agreements. 23 We may be contractually obligated to purchase property even if we are unable to secure financing for the acquisition.
Demand for products and services provided by the lodging industry generally trails improvement in economic conditions. The lodging industry has historically exhibited a strong correlation to U.S. gross domestic product, which was materially adversely affected by the COVID-19 pandemic.
Demand for products and services provided by the lodging industry generally trails improvement in economic conditions. The lodging industry has historically exhibited a strong correlation to U.S. gross domestic product.
If we made a taxable dividend payable in cash and our common stock and a significant number of our stockholders determine to sell shares of our common stock in order to pay taxes owed on dividends, it may put downward pressure on the trading price of our common stock. 27 Dividends payable by REITs generally do not qualify for the reduced tax rates available for some dividends.
If we made a taxable dividend payable in cash and our common stock and a significant number of our stockholders determine to sell shares of our common stock in order to pay taxes owed on dividends, it may put downward pressure on the trading price of our common stock.
Specifically, the value of collateral securing any loan investment we may make could decrease below the outstanding principal amounts of such loans, requiring us to pledge more collateral. Our organizational documents have no limitation on the amount of indebtedness we may incur. As a result, we may become highly leveraged in the future, which could materially and adversely affect us.
Specifically, the value of collateral securing any loan investment we may make could decrease below the outstanding principal amounts of such loans, requiring us to pledge more collateral. 20 Our organizational documents have no limitation on the amount of indebtedness we may incur.
Significant sales of our common stock, or the perception that significant sales of such shares could occur, may cause the price of our common stock to decline significantly.
These broad market fluctuations may adversely affect the trading price of our common stock. 29 Significant sales of our common stock, or the perception that significant sales of such shares could occur, may cause the price of our common stock to decline significantly.
These restrictions on transferability and ownership will not apply, however, if our Board of Directors determines that it is no longer in our best interest to continue to qualify as a REIT or that compliance is no longer required in order for us to qualify as a REIT. 28 We may be subject to adverse legislative or regulatory tax changes that could reduce the market price of our common stock.
These restrictions on transferability and ownership will not apply, however, if our Board of Directors determines that it is no longer in our best interest to continue to qualify as a REIT or that compliance is no longer required in order for us to qualify as a REIT.
Our business strategy contemplates the use of both non-recourse secured and unsecured debt to finance long-term growth and we may use recourse debt in the future.
As a result, we may become highly leveraged in the future, which could materially and adversely affect us. Our business strategy contemplates the use of both non-recourse secured and unsecured debt to finance long-term growth and we may use recourse debt in the future.
Our hotels incur costs to comply with these environmental, health and safety laws and regulations and could be subject to fines and penalties for non-compliance with applicable requirements, as well as claims from contamination or exposure to harmful substances or environmental conditions. 34 Certain of our hotels contain, and those that we acquire in the future may contain, or may have contained, asbestos-containing material ("ACM").
Our hotels incur costs to comply with these environmental, health and safety laws and regulations and could be subject to fines and penalties for non-compliance with applicable requirements, as well as claims from contamination or exposure to harmful substances or environmental conditions.
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. Consumers are also increasingly aware of the climate change-related impact of travel and may change their traveling preferences or behaviors as a result.
Our senior management team may make investments with lower rates of return than those anticipated under current market conditions and/or may make investments with greater risks to achieve those anticipated returns.
Our senior management team may make investments with lower rates of return than those anticipated under current market conditions and/or may make investments with greater risks to achieve those anticipated returns. We expect that our Board of Directors may not always approve each proposed investment or financing strategy by our senior management team.
Stock markets in general have experienced volatility that has often been unrelated to the operating performance of a particular company. These broad market fluctuations may adversely affect the trading price of our common stock.
Stock markets in general have experienced volatility that has often been unrelated to the operating performance of a particular company.
Our operating risks include decreases in hotel revenues and increases in hotel operating expenses, including but not limited to the increases in wage and benefit costs, repair and maintenance expenses, energy costs, insurance costs and other operating expenses, which would adversely affect our TRS lessees’ ability to pay us rent due under the leases.
Our operating risks include decreases in hotel revenues and increases in hotel operating expenses, including but not limited to the increases in wage and benefit costs, repair and maintenance expenses, energy costs, insurance costs and other operating expenses, which would adversely affect our TRS lessees’ ability to pay us rent due under the leases. 25 Increases in these operating expenses can have a significant adverse impact on our financial condition, results of operations, the market price of our common shares and our ability to make distributions to our stockholders.
We believe that the hotels that are leased to our TRS lessees are qualified lodging facilities. Although we intend to monitor future acquisitions and improvements of properties, REIT provisions of the Code provide only limited guidance for making determinations under the requirements for qualified lodging facilities, and there can be no assurance that these requirements will be satisfied.
Although we intend to monitor future acquisitions and improvements of properties, REIT provisions of the Code provide only limited guidance for making determinations under the requirements for qualified lodging facilities, and there can be no assurance that these requirements will be satisfied. 26 Complying with REIT requirements may force us to forgo and/or liquidate otherwise attractive investment opportunities.
However, these proactive measures may not deter every occurrence of cyber-attacks and/or unauthorized access events of our own corporate systems. Risks Related to Debt Financing Volatility in the financial markets and challenging economic conditions could adversely affect our ability to secure debt financing on attractive terms and our ability to service any future indebtedness that we may incur.
Risks Related to Debt Financing Volatility in the financial markets and challenging economic conditions could adversely affect our ability to secure debt financing on attractive terms and our ability to service any future indebtedness that we may incur.
Anyone who acquires shares in violation of the ownership limit or the other restrictions on transfer in our charter bears the risk of suffering a financial loss when the shares are redeemed or sold if the market price of our shares falls between the date of purchase and the date of redemption or sale.
Anyone who acquires shares in violation of the ownership limit or the other restrictions on transfer in our charter bears the risk of suffering a financial loss when the shares are redeemed or sold if the market price of our shares falls between the date of purchase and the date of redemption or sale. 32 Our charter permits our Board of Directors to issue preferred stock on terms that may subordinate the rights of the holders of our current common stock or discourage a third-party from acquiring us.
We expect that our Board of Directors may not always approve each proposed investment or financing strategy by our senior management team. 33 General Risks The departure of any of our key personnel who have significant experience and relationships in the lodging industry could materially and adversely impede or impair our ability to compete effectively and limit future growth prospects.
General Risks The departure of any of our key personnel who have significant experience and relationships in the lodging industry could materially and adversely impede or impair our ability to compete effectively and limit future growth prospects. We depend on the experience and relationships of our senior management team to manage our day-to-day operations and strategic business direction.
Increases in these operating expenses can have a significant adverse impact on our financial condition, results of operations, the market price of our common shares and our ability to make distributions to our stockholders. 25 Our ownership of our TRS, and any other TRSs we form, will be subject to limitations and our transactions with our TRS, and any other TRSs we form, will cause us to be subject to a 100% penalty tax on certain income or deductions if those transactions are not conducted on arm’s-length terms.
Our ownership of our TRS, and any other TRSs we form, will be subject to limitations and our transactions with our TRS, and any other TRSs we form, will cause us to be subject to a 100% penalty tax on certain income or deductions if those transactions are not conducted on arm’s-length terms.
We depend on the experience and relationships of our senior management team to manage our day-to-day operations and strategic business direction. Our senior management team has an extensive network of lodging industry contacts and relationships, including relationships with global and national hotel brands, hotel owners, financiers, third-party management companies, commercial real estate brokers, developers and management companies.
Our senior management team has an extensive network of lodging industry contacts and relationships, including relationships with global and national hotel brands, hotel owners, financiers, third-party management companies, commercial real estate brokers, developers and management companies. We can provide no assurances that any of our key personnel will continue their employment with us.
Thus, our profits are generally more significantly affected by economic downturns and declines in revenues. If we are unable to offset these costs with sufficient revenues across our portfolio, it could materially and adversely affect our results of operations and profitability and lead to cash flow from operations to become negative.
If we are unable to offset these costs with sufficient revenues across our portfolio, it could materially and adversely affect our results of operations and profitability and lead cash flow from operations to become negative. 13 Risks Related to the Real Estate Industry There are inherent risks with investments in real estate, including the relative illiquid nature of such investments.
This and other regulations will likely lead to increased costs as well as scrutiny that could heighten all of the risks identified in this risk factor. Additionally, many of our customers and suppliers may be subject to similar expectations, which may augment or create additional risks, including risks that may not be known to us.
To the extent we are subject to such litigation or activism, it may require us to incur costs or otherwise adversely impact our business. This and other stakeholder expectations will likely lead to increased costs as well as scrutiny that could heighten all of the risks identified in this risk factor.
Risks Related to the Real Estate Industry There are inherent risks with investments in real estate, including the relative illiquid nature of such investments. Investments in real estate are subject to varying degrees of risk.
Investments in real estate are subject to varying degrees of risk.
Uninsured and underinsured losses at our hotels could materially and adversely affect our revenues and profitability.
Additionally, many of our business partners and suppliers may be subject to similar expectations, which may augment or create additional risks, including risks that may not be known to us. Uninsured and underinsured losses at our hotels could materially and adversely affect our revenues and profitability.
Removed
Risks Related to the COVID-19 Pandemic The COVID-19 pandemic has had a material adverse impact on the travel, lodging and hospitality industries and, as a result, our business, results of operations, cash flows and financial condition, and the impacts of the pandemic may persist or become more pronounced in the future as the pace and evenness of the recovery remains uncertain.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeThe following table sets forth our brand affiliations as of December 31, 2022: Number of Hotels Number of Rooms Percentage of Total Rooms Marriott Autograph Collection 4 471 5.0 % Marriott 3 1,449 15.2 % Renaissance 1 522 5.5 % The Ritz-Carlton 2 567 6.0 % W 1 346 3.6 % Westin 2 875 9.2 % Subtotal 13 4,230 44.5 % Hyatt Andaz 3 451 4.7 % Hyatt Centric 1 120 1.3 % Hyatt Regency 4 2,375 25.0 % Park Hyatt 1 327 3.4 % The Unbound Collection 1 119 1.3 % Subtotal 10 3,392 35.7 % Fairmont 2 730 7.7 % Kimpton 4 637 6.7 % Loews 1 285 3.0 % Hilton - Waldorf Astoria 1 127 1.3 % Total branded 31 9,401 98.9 % Independent 1 107 1.1 % Total portfolio 32 9,508 100 % 38 Our Hotels The following table provides a list of our portfolio as of December 31, 2022 (1) : Hotel Rooms Year Acquired/Opened State Brand Affiliation Hotel Management Company (2) Chain Scale Segment (3) Andaz Napa (4) 141 2013 CA Hyatt Hyatt L Andaz San Diego 159 2013 CA Hyatt Hyatt L Andaz Savannah 151 2013 GA Hyatt Hyatt L Bohemian Hotel Savannah Riverfront, Autograph Collection 75 2012 GA Marriott Kessler UU Fairmont Dallas 545 2011 TX Fairmont Accor L Fairmont Pittsburgh 185 2018 PA Fairmont Accor L Grand Bohemian Hotel Charleston, Autograph Collection 50 2015 SC Marriott Kessler UU Grand Bohemian Hotel Mountain Brook, Autograph Collection 99 2015 AL Marriott Kessler UU Grand Bohemian Hotel Orlando, Autograph Collection (4) 247 2012 FL Marriott Kessler UU Hyatt Centric Key West Resort & Spa 120 2013 FL Hyatt Hyatt UU Hyatt Regency Grand Cypress 779 2017 FL Hyatt Hyatt UU Hyatt Regency Portland at the Oregon Convention Center 600 2019 OR Hyatt Hyatt UU Hyatt Regency Santa Clara (5) 505 2013 CA Hyatt Hyatt UU Hyatt Regency Scottsdale Resort & Spa at Gainey Ranch 491 2017 AZ Hyatt Hyatt UU Kimpton Canary Hotel Santa Barbara 97 2015 CA Kimpton Kimpton UU Kimpton Hotel Monaco Salt Lake City 225 2013 UT Kimpton Kimpton UU Kimpton Hotel Palomar Philadelphia 230 2015 PA Kimpton Kimpton UU Kimpton RiverPlace Hotel 85 2015 OR Kimpton Kimpton UU Loews New Orleans Hotel 285 2013 LA Loews Loews L Lorien Hotel & Spa 107 2013 VA Independent Davidson I Marriott Dallas Downtown 416 2010 TX Marriott Marriott UU Marriott San Francisco Airport Waterfront (4) 688 2012 CA Marriott Marriott UU Marriott Woodlands Waterway Hotel & Convention Center (5) 345 2007 TX Marriott Marriott UU Park Hyatt Aviara Resort, Golf Club & Spa 327 2018 CA Hyatt Hyatt L Renaissance Atlanta Waverly Hotel & Convention Center (4) 522 2012 GA Marriott Renaissance UU The Ritz-Carlton, Denver 202 2018 CO Marriott Marriott L The Ritz-Carlton, Pentagon City (5) 365 2017 VA Marriott Marriott L Royal Palms Resort & Spa, The Unbound Collection by Hyatt 119 2017 AZ Hyatt Hyatt L W Nashville 346 2022 TN Marriott Marriott L Waldorf Astoria Atlanta Buckhead 127 2018 GA Hilton Waldorf Astoria L Westin Galleria Houston 469 2013 TX Marriott Westin UU Westin Oaks Houston at the Galleria 406 2013 TX Marriott Westin UU (1) Includes only the hotels in our portfolio as of December 31, 2022.
Biggest changeThe following table sets forth our brand affiliations as of December 31, 2023: Number of Hotels Number of Rooms Percentage of Total Rooms Marriott Autograph Collection 4 471 5.0 % Marriott 3 1,452 15.2 % Renaissance 1 522 5.5 % The Ritz-Carlton 2 570 6.0 % W 1 346 3.6 % Westin 2 875 9.2 % Subtotal 13 4,236 44.5 % Hyatt Andaz 3 451 4.7 % Hyatt Centric 1 120 1.3 % Hyatt Regency 4 2,375 25.0 % Park Hyatt 1 327 3.4 % The Unbound Collection 1 119 1.3 % Subtotal 10 3,392 35.7 % Fairmont 2 730 7.7 % Kimpton 4 637 6.7 % Loews 1 285 3.0 % Hilton - Waldorf Astoria 1 127 1.3 % Total branded 31 9,407 98.9 % Independent 1 107 1.1 % Total portfolio 32 9,514 100 % 40 Our Hotels The following table provides a list of our portfolio as of December 31, 2023 (1) : Hotel Rooms Year Acquired/Opened State Brand Affiliation Hotel Management Company (2) Chain Scale Segment (3) Andaz Napa (4) 141 2013 CA Hyatt Hyatt L Andaz San Diego 159 2013 CA Hyatt Hyatt L Andaz Savannah 151 2013 GA Hyatt Hyatt L Bohemian Hotel Savannah Riverfront, Autograph Collection 75 2012 GA Marriott Kessler UU Fairmont Dallas 545 2011 TX Fairmont Accor L Fairmont Pittsburgh 185 2018 PA Fairmont Accor L Grand Bohemian Hotel Charleston, Autograph Collection 50 2015 SC Marriott Kessler UU Grand Bohemian Hotel Mountain Brook, Autograph Collection 99 2015 AL Marriott Kessler UU Grand Bohemian Hotel Orlando, Autograph Collection (4) 247 2012 FL Marriott Kessler UU Hyatt Centric Key West Resort & Spa 120 2013 FL Hyatt Hyatt UU Hyatt Regency Grand Cypress 779 2017 FL Hyatt Hyatt UU Hyatt Regency Portland at the Oregon Convention Center 600 2019 OR Hyatt Hyatt UU Hyatt Regency Santa Clara (5) 505 2013 CA Hyatt Hyatt UU Hyatt Regency Scottsdale Resort & Spa at Gainey Ranch 491 2017 AZ Hyatt Hyatt UU Kimpton Canary Hotel Santa Barbara 97 2015 CA Kimpton Kimpton UU Kimpton Hotel Monaco Salt Lake City 225 2013 UT Kimpton Kimpton UU Kimpton Hotel Palomar Philadelphia 230 2015 PA Kimpton Kimpton UU Kimpton RiverPlace Hotel 85 2015 OR Kimpton Kimpton UU Loews New Orleans Hotel 285 2013 LA Loews Loews L Lorien Hotel & Spa 107 2013 VA Independent Davidson I Marriott Dallas Downtown 416 2010 TX Marriott Marriott UU Marriott San Francisco Airport Waterfront (4) 688 2012 CA Marriott Marriott UU Marriott Woodlands Waterway Hotel & Convention Center (5) 348 2007 TX Marriott Marriott UU Park Hyatt Aviara Resort, Golf Club & Spa 327 2018 CA Hyatt Hyatt L Renaissance Atlanta Waverly Hotel & Convention Center 522 2012 GA Marriott Renaissance UU Royal Palms Resort & Spa, The Unbound Collection by Hyatt 119 2017 AZ Hyatt Hyatt L The Ritz-Carlton, Denver 205 2018 CO Marriott Marriott L The Ritz-Carlton, Pentagon City (5) 365 2017 VA Marriott Marriott L W Nashville 346 2022 TN Marriott Marriott L Waldorf Astoria Atlanta Buckhead 127 2018 GA Hilton Waldorf Astoria L Westin Galleria Houston 469 2013 TX Marriott Westin UU Westin Oaks Houston at the Galleria 406 2013 TX Marriott Westin UU (1) Includes only the hotels in our portfolio as of December 31, 2023.
Subsidiaries of our Operating Partnership, as lessors, lease our hotels to our TRS lessees, which, in turn, are parties to the existing management agreements with third-party hotel management companies for each our hotels.
Subsidiaries of our Operating Partnership, as lessors, lease our hotels to our TRS lessees, which, in turn, are parties to the existing management agreements with third-party hotel management companies for each of our hotels.
Termination Events Our franchise agreements provide for termination at the applicable franchisor’s option upon the occurrence of certain events, including, among others: the failure to maintain brand standards; the failure to pay royalties and fees or to perform other 42 obligations under the franchise license; bankruptcy; and abandonment of the franchise or a change of control.
Termination Events Our franchise agreements provide for termination at the applicable franchisor’s option upon the occurrence of certain events, including, among others: the failure to maintain brand standards; the failure to pay royalties and fees or to perform other obligations under the franchise license; bankruptcy; and abandonment of the franchise or a change of control.
Guarantee and Franchisor Rights The TRS lessee that is the franchisee is responsible for making all payments to the franchisor under the applicable franchise agreement; however, Xenia Hotels & Resorts, Inc., XHR LP and/or the corresponding property-owning subsidiary generally guarantee the TRS lessee’s obligations under the franchise agreements.
Guarantee and Franchisor Rights The TRS lessee that is the franchisee is responsible for making all payments to the franchisor under the applicable franchise agreement; however, Xenia Hotels & Resorts, Inc., XHR LP and/or the corresponding property-owning subsidiary generally 44 guarantee the TRS lessee’s obligations under the franchise agreements.
Termination Events Performance Termination As with our management agreements for brand-managed hotels, most of the management agreements for franchised hotels provide us with a right to terminate the agreement if the management company fails to achieve certain criteria relating to the performance of the hotel.
Termination Events Performance Termination As with our management agreements for brand-managed hotels, our management agreements for franchised hotels provide us with a right to terminate the agreement if the management company fails to achieve certain criteria relating to the performance of the hotel.
In particular, Hyatt Regency Santa Clara incurs percentage rent based on a percentage of rooms revenue and ballroom receipts, which exceeded the minimum base rent for the years ended December 31, 2022 and 2021.
In particular, Hyatt Regency Santa Clara incurs percentage rent based on a percentage of rooms revenue and ballroom receipts, which exceeded the minimum base rent for the years ended December 31, 2023, 2022 and 2021.
Fees Generally, the management agreements for franchised hotels contain a two-tiered fee structure in which the management company receives a base management fee and, if certain financial thresholds are met or exceeded, an incentive management fee, each calculated on a per hotel basis. The base management fees range from 2.0% to 3.0% of gross hotel revenue.
Fees Generally, the management agreements for franchised hotels contain a two-tiered fee structure in which the management company receives a base management fee and, if certain financial thresholds are met or exceeded, an incentive management fee, each calculated on a per hotel basis. The base management fees range from 2.0% to 2.5% of gross hotel revenue.
(3) "L" refers to Luxury, "UU" refers to Upper Upscale and "I" refers to Independent as defined by STR. (4) These properties are subject to mortgage debt as of December 31, 2022. (5) These hotels are subject to a ground lease that covers all or part of the land underlying the hotel. See "Part I-Item 2.
(3) "L" refers to Luxury, "UU" refers to Upper Upscale and "I" refers to Independent as defined by STR. (4) These properties are subject to mortgage debt as of December 31, 2023. (5) These hotels are subject to a ground lease that covers all or part of the land underlying the hotel. See "Part I-Item 2.
Properties - Our Principal Agreements- Ground Leases" for more information. 39 Our Principal Agreements Hotel Management and Franchise Agreements In order to maintain our qualification as a REIT, we cannot directly or indirectly operate any of our hotels. We lease each of our 32 hotels to TRS lessees, which in turn engage property managers to manage our hotels.
Properties - Our Principal Agreements- Ground Leases" for more information. 41 Our Principal Agreements Hotel Management and Franchise Agreements In order to maintain our qualification as a REIT, we cannot directly or indirectly operate any of our hotels. We lease each of our 32 hotels to TRS lessees, which in turn engage property managers to manage our hotels.
Term The majority of our management agreements for brand-managed hotels contain an initial term of between 10 to 30 years, and have an average remaining term of approximately 13 years, assuming no renewal options are exercised by the management company. These agreements generally allow for one or more renewal periods at the option of the management company.
Term The majority of our management agreements for brand-managed hotels contain an initial term of between 10 to 30 years and have an average remaining term of approximately 14 years, assuming no renewal options are exercised by the management company. These agreements generally allow for one or more renewal periods at the option of the management company.
Term The management agreements for our franchised hotels generally contain initial terms between 15 and 20 years with an average remaining initial term of approximately seven years. None of these agreements contemplate a renewal or extension of the initial term or can be extended without our consent.
Term The management agreements for our franchised hotels generally contain initial terms between 15 and 20 years with an average remaining initial term of approximately six years. None of these agreements contemplate a renewal or extension of the initial term or can be extended without our consent.
Item 2. Properties We lease our corporate headquarters located at 200 S. Orange Avenue, Suite 2700, Orlando, Florida 32801. Hotel Properties As of December 31, 2022, we owned a portfolio of 32 hotels and resorts across 14 states.
Item 2. Properties We lease our corporate headquarters located at 200 S. Orange Avenue, Suite 2700, Orlando, Florida 32801. Hotel Properties As of December 31, 2023, we owned a portfolio of 32 hotels and resorts across 14 states.
Of our brand-managed hotels, approximately 42% of our brand-managed hotels (by room count as of December 31, 2022) are managed by Marriott and its affiliates, approximately 38% are managed by Hyatt and the remainder are managed by management companies affiliated with a variety of other brands.
Of our brand-managed hotels, approximately 42% of our brand-managed hotels (by room count as of December 31, 2023) are managed by Marriott and its affiliates, approximately 38% are managed by Hyatt and the remainder are managed by management companies affiliated with a variety of other brands.
In some cases, our right to terminate a management 40 agreement based on performance is subject to certain exceptions related to force majeure events and/or disruption due to large scale renovations.
In some cases, our right to terminate a management 42 agreement based on performance is subject to certain exceptions related to force majeure events and/or disruption due to large scale renovations.
To ensure our compliance, the franchise agreements specify that we must make the hotel available for quality inspections by the franchisor. We are also required to participate in the applicable loyalty rewards program for each brand. Term Our franchise agreements contain initial terms of 20 years, with an average remaining initial term of approximately ten years.
To ensure our compliance, the franchise agreements specify that we must make the hotel available for quality inspections by the franchisor. We are also required to participate in the applicable loyalty rewards program for each brand. Term Our franchise agreements have initial terms of 20 years, with an average remaining initial term of approximately nine years.
Ground Leases The following table summarizes the remaining primary term, renewal rights, purchase rights and monthly base rent as of December 31, 2022 associated with land underlying our hotels and meeting facilities that we lease from third-parties: Property Current Lease Term Expiration Renewal Rights / Purchase Rights Current Monthly Minimum or Base Rent (1) Base Rent Increases at Renewal Lease Type Ground Lease: Entire Property Hyatt Regency Santa Clara April 30, 2035 4 x 10 years, 1 x 9 years (2) $62,013 No increase unless lessee exercises its option to expand at which time base rent will be increased by $800 for each additional hotel room in excess of 500 Triple Net The Ritz-Carlton, Pentagon City May 7, 2040 2 x 25 years $53,375 Fair market rent adjustment at commencement of lease renewal Triple Net Ground Lease: Partial Property Convention Center at Marriott Woodlands Waterway Hotel & Convention Center June 30, 2100 No renewal rights $11,927 (3) Not applicable Triple Net (1) In addition to minimum rent, the Company may owe percentage rent.
Ground Leases The following table summarizes the remaining primary term, renewal rights, purchase rights and monthly base rent as of December 31, 2023 associated with land underlying our hotels and meeting facilities that we lease from third-parties: Property Current Lease Term Expiration Renewal Rights / Purchase Rights Current Monthly Minimum or Base Rent (1) Base Rent Increases at Renewal Lease Type Ground Lease: Entire Property Hyatt Regency Santa Clara April 30, 2035 4 x 10 years, 1 x 9 years (2) $68,904 (3) Increases if lessee exercises its option to expand at which time base rent will be increased by $800 for each additional hotel room in excess of 500 Triple Net The Ritz-Carlton, Pentagon City May 7, 2040 2 x 25 years $53,375 Fair market rent adjustment at commencement of lease renewal Triple Net Ground Lease: Partial Property Convention Center at Marriott Woodlands Waterway Hotel & Convention Center June 30, 2100 No renewal rights $12,544 (3) Not applicable Triple Net (1) In addition to minimum rent, the Company may owe percentage rent.
Approximately 94% of our portfolio (by room count as of December 31, 2022) are operated pursuant to a management agreement, which we refer to as "brand-managed hotels." Below is a general overview of the management and franchise agreements for our hotels, summarizing the principal terms found in each type of agreement.
Approximately 5% of our portfolio (by room count as of December 31, 2023) are also operated under distinct franchise agreements, which we refer to as "franchised hotels." Approximately 94% of our portfolio (by room count as of December 31, 2023) are operated pursuant to a management agreement, which we refer to as "brand-managed hotels." Below is a general overview of the management and franchise agreements for our hotels, summarizing the principal terms found in each type of agreement.
Fees Our franchise agreements require that we pay a royalty fee ranging between 3% and 5.0% of the rooms revenue of the applicable hotel and, in some cases, an additional marketing, reservation or other program fee of 1.5% of the gross rooms revenue as well as other fees.
None of our franchise agreements contemplate any renewals or extensions of the initial term. Fees Our franchise agreements require that we pay a royalty fee ranging between 3.0% and 5.0% of the rooms revenue of the applicable hotel and an additional marketing, reservation or other program fee of 1.5% of the gross rooms revenue as well as other fees.
The Ritz-Carlton, Pentagon City incurs the greater of (i) minimum base rent or (ii) five percent (5%) of rooms revenues and, for the years ended December 31, 2022 and 2021, percentage rent exceeded minimum base rent. (2) The Company has a right of first refusal to purchase all or a portion of certain areas covered by the two separate leases.
The Ritz-Carlton, Pentagon City incurs the greater of (i) minimum base rent or (ii) five percent (5%) of rooms revenues and, for the years ended December 31, 2023, 2022 and 2021, percentage rent exceeded minimum base rent.
(3) The base rent for each year is adjusted based on a calculation tied to the Consumer Price Index. The monthly minimum or base rent in this chart is for the period from January 1, 2022 through December 31, 2022.
The monthly minimum or base rent in this chart is for the period from January 1, 2023 through December 31, 2023.
Each of our hotels is operated pursuant to a management agreement with an independent third-party hotel management company. Approximately 5% of our portfolio (by room count as of December 31, 2022), which we refer to as "franchised hotels", are also operated under distinct franchise agreements.
Each of our hotels is operated pursuant to a management agreement with an independent third-party hotel management company.
In some cases, our right to terminate a management agreement for a franchised hotel based on performance is subject to certain exceptions related to force majeure events and/or disruption due to large scale renovations.
We may have the opportunity to initiate a performance termination if, during any full calendar year, the hotel fails 43 to achieve a specified amount of priority return to us. In all cases, our right to terminate a management agreement for a franchised hotel based on performance is subject to certain exceptions related to force majeure events.
Removed
Generally, we may have the opportunity to initiate a performance termination if, during any two 41 consecutive year period, (i) the hotel fails to achieve a specified amount of operating profit, and/or (ii) certain operating metrics of the hotel, as compared to a competitive set of hotels in the relevant local market as agreed between the parties, fail to exceed a specified threshold as set forth in the applicable management agreement.
Added
(2) The Company has a right of first refusal to purchase all or a portion of certain areas covered by the two separate leases.
Removed
In some of the management agreements for franchised hotels, the management company has a right, which can usually be exercised no more than once per hotel, to avoid a performance termination by paying an amount specified in the applicable management agreement.
Added
(3) The base rent for each year is adjusted based on a calculation tied to the Consumer Price Index for the Convention Center at Marriott Woodlands Waterway Hotel & Convention Center and for a portion of the leased square footage at Hyatt Regency Santa Clara.
Removed
None of our franchise agreements contemplate any renewals or extensions of the initial term.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeWe currently believe that the ultimate outcome of such lawsuits and proceedings will not, individually or in the aggregate, have a material effect on our consolidated financial position, results of operations or liquidity. 43 Item 4. Mine Safety Disclosures Not applicable. 44 PART II
Biggest changeWe currently believe that the ultimate outcome of such lawsuits and proceedings will not, individually or in the aggregate, have a material effect on our consolidated financial position, results of operations or liquidity. Item 4. Mine Safety Disclosures Not applicable. 45 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeIn addition, our charter allows us to issue preferred stock that could have a preference over our common stock as to distributions and our Board of Directors could change our distribution policy in the future. 45 Common Stock The Company paid the following dividend on common stock during the year ended December 31, 2022 (1) : Dividend per Share/Unit For the Quarter Ended Record Date Payable Date $0.10 September 30, 2022 September 30, 2022 October 14, 2022 $0.10 December 31, 2022 December 31, 2022 January 13, 2023 (1) For income tax purposes, dividends paid per share on our common stock in 2022 were 100% taxable as ordinary income.
Biggest changeContact information can be found on the "Investor Relations" page of our website under "Investor Information." In addition, our charter allows us to issue preferred stock that could have a preference over our common stock as to distributions and our Board of Directors could change our distribution policy in the future. 46 Common Stock The Company paid the following dividend on common stock during the year ended December 31, 2023 (1) : Dividend per Share/Unit For the Quarter Ended Record Date Payable Date $0.10 March 31, 2023 March 31, 2023 April 14, 2023 $0.10 June 30, 2023 June 30, 2023 July 14, 2023 $0.10 September 30, 2023 September 29, 2023 October 13, 2023 $0.10 December 31, 2023 December 29, 2023 January 12, 2024 The Company paid the following dividend on common stock during the year ended December 31, 2022 (1) : Dividend per Share/Unit For the Quarter Ended Record Date Payable Date $0.10 September 30, 2022 September 30, 2022 October 14, 2022 $0.10 December 31, 2022 December 30, 2022 January 13, 2023 (1) For income tax purposes, dividends paid per share on our common stock in 2022 and 2023 were 100% taxable as ordinary income.
To the extent that our cash available for distribution is less than the amount required to be distributed under the REIT provisions of the Code, we may consider various funding sources to cover any shortfall, including borrowing under our revolving credit facility, selling certain of our assets or using a portion of the net proceeds we receive from future offerings of equity, equity-related or debt securities or declaring taxable common stock dividends.
To the extent that our cash available for distribution is less than the amount required to be distributed under the REIT provisions of the Code, we may consider various funding sources to cover any shortfall, including borrowing under our revolving line of credit, selling certain of our assets or using a portion of the net proceeds we receive from future offerings of equity, equity-related or debt securities or declaring taxable common stock dividends.
Total return values were calculated assuming a $100 investment on December 31, 2017 with reinvestment of all dividends in (i) our common shares, (ii) the DJUSHL REIT Index, (iii) the Russell 2000 Index and (iv) the FTSE NAREIT Equity Index.
Total return values were calculated assuming a $100 investment on December 31, 2018 with reinvestment of all dividends in (i) our common shares, (ii) the DJUSHL REIT Index, (iii) the Russell 2000 Index and (iv) the FTSE NAREIT Equity Index.
Issuer Purchases of Equity Securities Our Board of Directors has authorized a stock repurchase program pursuant to which we are authorized to repurchase up to $275 million of our outstanding common stock, par value $0.01 per share, in the open market, in privately negotiated transactions or otherwise, including pursuant to Rule 10b5-1 plans (the "Repurchase Program").
Issuer Purchases of Equity Securities Our Board of Directors has authorized a stock repurchase program pursuant to which we are authorized to repurchase our outstanding common stock, par value $0.01 per share, in the open market, in privately negotiated transactions or otherwise, including pursuant to Rule 10b5-1 plans (the "Repurchase Program").
Also as of February 28, 2023, there were 14 holders (other than our Company) of our Operating Partnership Units comprising certain of our executive officers and current or former members of our Board of Directors, which includes, with respect to such executive officers, unvested long-term incentive plan partnership units ("LTIP Units").
Also as of February 26, 2024, there were 14 holders (other than our Company) of our Operating Partnership Units comprising certain of our executive officers and current or former members of our Board of Directors, which includes, with respect to such executive officers, unvested long-term incentive plan partnership units ("LTIP Units").
The following graph provides a comparison of the cumulative total return on our common shares from December 31, 2017 to the NYSE closing price per share on December 31, 2022, with the cumulative total return on the Dow Jones U.S.
The following graph provides a comparison of the cumulative total return on our common shares from December 31, 2018 to the NYSE closing price per share on December 31, 2023, with the cumulative total return on the Dow Jones U.S.
Shareholder Information As of February 28, 2023, there were 11,117 holders of record of our outstanding common stock. This stockholder figure does not include a substantially greater number of "street name" holders, or beneficial holders, of our common stock whose shares are held by banks, brokers and other financial institutions.
Shareholder Information As of February 26, 2024, there were 10,352 holders of record of our outstanding common stock. This stockholder figure does not include a substantially greater number of "street name" holders, or beneficial holders, of our common stock whose shares are held by banks, brokers and other financial institutions.
LTIP Units may or may not vest based on the passage of time and meeting certain market-based performance objectives. Of the 3,427,285 LTIP Units outstanding at December 31, 2022, 1,706,656 units had vested and were eligible for redemption. Subject to certain restrictions, our Operating Partnership Units are redeemable for cash or, at our election, for our common shares.
LTIP Units may or may not vest based on the passage of time and meeting certain market-based performance objectives. Of the 3,782,000 LTIP Units outstanding at December 31, 2023, 1,621,802 units had vested and were eligible for redemption. Subject to certain restrictions, our Operating Partnership Units are redeemable for cash or, at our election, for our common shares.
To change the method used to receive distributions a stockholder may contact the Company or its transfer agent, Computershare, to obtain a Xenia Change of Distribution Election form. Contact information can be found on the "Investor Relations" page of our website under "Investor Information".
To change the method used to receive distributions a stockholder may contact the Company or its transfer agent, Computershare, to obtain a Xenia Change of Distribution Election form.
The total return values do not include any dividends declared, but not paid, during the period. 46 The actual returns shown on the graph above are as follows: Value of Investment at December 31, Name 2017 2018 2019 2020 2021 2022 Xenia Hotels & Resorts, Inc. $ 100.00 $ 83.73 $ 111.00 $ 81.41 $ 97.00 $ 71.06 DJUSHL REIT Index 100.00 83.21 91.28 60.95 72.44 67.72 Russell 2000 Index 100.00 87.82 108.66 128.61 146.23 114.70 FTSE NAREIT Equity Index 100.00 91.28 110.51 97.78 135.89 99.17 Recent Sales of Unregistered Securities None.
The total return values do not include any dividends declared, but not paid, during the period. 47 The actual returns shown on the graph above are as follows: Value of Investment at December 31, Name 2018 2019 2020 2021 2022 2023 Xenia Hotels & Resorts, Inc. $ 100.00 $ 132.57 $ 97.23 $ 115.85 $ 84.87 $ 90.53 DJUSHL REIT Index 100.00 109.70 73.24 87.06 81.38 99.96 Russell 2000 Index 100.00 123.72 146.44 166.50 130.60 150.31 FTSE NAREIT Equity Index 100.00 121.07 107.12 148.87 108.64 118.37 Recent Sales of Unregistered Securities None.
The following table sets forth information regarding the Company's repurchases of shares of its common stock pursuant to its Repurchase Program during the quarter ended December 31, 2022: Period Total Number of Shares Purchased Weighted- Average Price Paid Per Share Total Numbers of Shares Purchased as Part of Publicly Announced Plans Maximum Number (or Approximate Dollar Value) of Shares That May Yet Be Purchased Under the Program (in thousands) October 1 to October 31, 2022 415,434 $ 15.18 415,434 $ 86,473 November 1 to November 30, 2022 1,038,390 $ 14.50 1,038,390 $ 171,412 December 1 to December 31, 2022 337,992 $ 14.66 337,992 $ 166,457 Total 1,791,816 $ 14.69 1,791,816 47
The following table sets forth information regarding the Company's repurchases of shares of its common stock pursuant to its Repurchase Program during the quarter ended December 31, 2023: Period Total Number of Shares Purchased Weighted- Average Price Paid Per Share Total Numbers of Shares Purchased as Part of Publicly Announced Plans Maximum Number (or Approximate Dollar Value) of Shares That May Yet Be Purchased Under the Program (in thousands) October 1 to October 31, 2023 849,762 $ 11.77 849,762 $ 72,722 November 1 to November 30, 2023 700,602 $ 11.93 700,602 $ 164,367 December 1 to December 31, 2023 2,347,413 $ 13.05 2,347,413 $ 133,735 Total 3,897,777 $ 12.57 3,897,777 48
During the year ended December 31, 2020, 165,516 shares were repurchased under the Repurchase Program, at a weighted-average price of $13.68 per share for an aggregate purchase price of $2.3 million. As of December 31, 2022, the Company had approximately $166.5 million remaining under its share repurchase authorization.
During the year ended December 31, 2023, 10,414,262 shares were repurchased under the Repurchase Program, at a weighted-average price of $12.74 per share for an aggregate purchase price of $132.7 million.
Removed
The Company had suspended its quarterly dividend in order to preserve liquidity and did not declare any dividends during the year ended December 31, 2021.
Added
As of December 31, 2023, the Company had approximately $133.7 million remaining under its share repurchase authorization.

Item 7. Management's Discussion & Analysis

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

119 edited+39 added−67 removed81 unchanged
Biggest changeThe following represents the disposition details for the properties sold in the years ended December 31, 2022, 2021 and 2020 (in thousands, except number of rooms): Property Date No. of Rooms Gross Sale Price Kimpton Hotel Monaco Chicago 01/2022 191 $ 36,000 Bohemian Hotel Celebration, Autograph Collection 10/2022 115 $ 27,750 Kimpton Hotel Monaco Denver 12/2022 189 $ 69,750 Total for the year ended December 31, 2022 495 $ 133,500 Marriott Charleston Town Center 11/2021 352 $ 5,000 Total for the year ended December 31, 2021 352 $ 5,000 Residence Inn Boston Cambridge 10/2020 221 $ 107,500 Marriott Napa Valley Hotel & Spa 10/2020 275 $ 100,096 Hotel Commonwealth 11/2020 245 $ 113,000 Renaissance Austin Hotel 11/2020 492 $ 70,000 Total for the year ended December 31, 2020 1,233 $ 390,596 The following represents our acquisitions activity for the year ended December 31, 2022 (in thousands, except number of rooms): Property Location Date No. of Rooms Net Purchase Price W Nashville Nashville, TN 03/2022 346 $ 328,500 No hotels were acquired during the years ended December 31, 2021 and 2020. 54 Comparison of the year ended December 31, 2022 to the year ended December 31, 2021 Operating Information The following table sets forth certain operating information for the years ended December 31, 2022 and 2021: Year Ended December 31, 2022 2021 Change Number of properties at January 1 34 35 (1) Properties acquired 1 — 1 Properties disposed (3) (1) 2 Number of properties at December 31 32 34 (2) Number of rooms at January 1 9,659 10,011 (352) Rooms in properties acquired or added to portfolio upon completion of property improvements (1) 346 — 346 Rooms in properties disposed or combined during property improvements (2) (497) (352) (145) Number of rooms at December 31 9,508 9,659 (151) Portfolio Statistics: Occupancy (3) 62.9 % 47.5 % 1,540 bps ADR (3) $ 258.76 $ 218.41 18.5% RevPAR (3) $ 162.75 $ 103.64 57.0% Hotel operating income (in thousands) (4) $ 325,332 $ 170,141 91.2% (1) During the year ended December 31, 2022, we acquired the 346-room W Nashville.
Biggest changeAs of December 31, 2021, the Company owned 34 lodging properties with a total of 9,659 rooms. 54 The following represents the disposition details for the properties sold in the years ended December 31, 2022 and 2021 (in thousands, except number of rooms): Property Date No. of Rooms Gross Sale Price Kimpton Hotel Monaco Chicago 01/2022 191 $ 36,000 Bohemian Hotel Celebration, Autograph Collection 10/2022 115 $ 27,750 Kimpton Hotel Monaco Denver 12/2022 189 $ 69,750 Total for the year ended December 31, 2022 495 $ 133,500 Marriott Charleston Town Center 11/2021 352 $ 5,000 Total for the year ended December 31, 2021 352 $ 5,000 No hotels were sold during the year ended December 31, 2023.
FFO and Adjusted FFO We calculate FFO in accordance with standards established by Nareit, as amended in the 2018 restatement white paper, which defines FFO as net income or loss (calculated in accordance with GAAP), excluding real estate-related depreciation, amortization and impairments, gains (losses) from sales of real estate, the cumulative effect of changes in accounting principles, similar adjustments for unconsolidated partnerships and consolidated variable interest entities, and items classified by GAAP as extraordinary.
FFO and Adjusted FFO We calculate FFO in accordance with standards established by Nareit, as amended in the 2018 Restatement White Paper, which defines FFO as net income or loss (calculated in accordance with GAAP), excluding real estate-related depreciation, amortization and impairments, gains or losses from sales of real estate, the cumulative effect of changes in accounting principles, similar adjustments for unconsolidated partnerships and consolidated variable interest entities, and items classified by GAAP as extraordinary.
Additionally, during the year ended December 31, 2021, we wrote off $0.6 million related to previously capitalized design costs for a renovation project that will no longer be completed due to a change of scope.
Additionally, during the year ended December 31, 2021, we wrote off $0.6 million related to previously capitalized design costs for a renovation project that will no longer be completed due to a change of scope.
Our reconciliations to the most comparable GAAP financial measures, and our consolidated statements of operations and comprehensive (loss) income, include interest expense, and other excluded items, all of which should be considered when evaluating our performance, as well as the usefulness of our non-GAAP financial measures.
Our reconciliations to the most comparable GAAP financial measures, and our consolidated statements of operations and comprehensive income (loss), include interest expense, and other excluded items, all of which should be considered when evaluating our performance, as well as the usefulness of our non-GAAP financial measures.
Derivative instruments are subject to fair value reporting at each reporting date and the increase or decrease in fair value is recorded in net income (loss) or accumulated other comprehensive income (loss), based on the applicable hedge 67 accounting guidance.
Derivative instruments are subject to fair value reporting at each 67 reporting date and the increase or decrease in fair value is recorded in net income (loss) or accumulated other comprehensive income, based on the applicable hedge accounting guidance.
Events or circumstances that may cause a review include, but are not limited to, when (1) a hotel property experiences a significant decrease in the market price of the long-lived asset, (2) a hotel property experiences a current or projected loss from operations combined with a history of operating or cash flow losses, (3) it becomes more likely than not that 52 a hotel property will be sold before the end of its useful life, (4) an accumulation of costs is significantly in excess of the amount originally expected for the acquisition, construction or renovation of a long-lived asset, (5) adverse changes in the demand occur for lodging at a specific property due to declining national or local economic conditions and/or new hotel construction in markets where the hotel is located, (6) there is a significant adverse change in legal factors or in the business climate that could affect the value of the long-lived asset and/or (7) there is a significant adverse change in the extent or manner in which a long-lived asset is being used or in its physical condition.
Events or circumstances that may cause a review include, but are not limited to, when (1) a hotel property experiences a significant decrease in the market price of the long-lived asset, (2) a hotel property experiences a current or projected loss from operations combined with a history of operating or cash flow losses, (3) it becomes more likely than not that a hotel property will be sold before the end of its useful life, (4) an accumulation of costs is significantly in excess of the amount originally expected for the acquisition, construction or renovation of a long-lived asset, (5) adverse changes in the demand occur for lodging at a specific property due to declining national or local economic conditions and/or new hotel construction in markets where the hotel is located, (6) there is a significant adverse change in legal factors or in the business climate that could affect the value of the long-lived asset and/or (7) there is a significant adverse change in the extent or manner in which a long-lived asset is being used or in its physical condition.
We also adjust EBITDAre for certain additional items such as depreciation and amortization related to corporate assets, hotel property acquisition, terminated transaction and pre-opening expenses, amortization of share-based compensation, non-cash ground rent and straight-line rent expense, the cumulative effect of changes in accounting principles, and other costs we believe do not represent recurring operations and are not indicative of the performance of our underlying hotel property entities.
We also adjust EBITDAre for certain additional items such as depreciation and amortization related to corporate assets, terminated transaction and pre-opening expenses, amortization of share-based compensation, non-cash ground rent and straight-line rent expense, the cumulative effect of changes in accounting principles, and other costs we believe do not represent recurring operations and are not indicative of the performance of our underlying hotel property entities.
We believe that the presentation of FFO provides useful supplemental information to investors regarding our operating performance by excluding the effect of real estate depreciation and amortization, gains (losses) from sales for real estate, impairments of real estate assets, extraordinary items and the portion of these items related to unconsolidated entities, all of which are based on historical cost accounting and which may be of lesser significance in evaluating current performance.
We believe that the presentation of FFO provides useful supplemental information to investors regarding our operating performance by excluding the effect of real estate depreciation and amortization, gains or losses from sales for real estate, impairments of real estate assets, extraordinary items and the portion of these items related to unconsolidated entities, all of which are based on historical cost accounting and which may be of lesser significance in evaluating current performance.
The indentures governing the Senior Notes contain customary covenants that limit our ability and, in certain circumstances, the ability of its subsidiaries, to borrow money, create liens on assets, make distributions and pay dividends on or redeem or repurchase stock, make certain types of investments, sell stock in certain subsidiaries, enter into agreements that restrict dividends or other payments from subsidiaries, enter into transactions with affiliates, issue guarantees of indebtedness, and sell assets or merge with other companies.
The indentures governing the Senior Notes contain customary covenants that limit our ability and, in certain circumstances, the ability of our subsidiaries, to borrow money, create liens on assets, make distributions and pay dividends on or redeem or repurchase stock, make certain types of investments, sell stock in certain subsidiaries, enter into agreements that restrict dividends or other payments from subsidiaries, enter into transactions with affiliates, issue guarantees of indebtedness, and sell assets or merge with other companies.
Exhibits and Financial Statements Schedules." The following represent certain critical accounting policies that require us to exercise our business judgment or make significant estimates. Investment in Hotel Properties Investments in hotel properties, including land and land improvements, building and building improvements, furniture, fixtures and equipment, and identifiable intangible assets and liabilities, will generally be accounted for as asset acquisitions.
Exhibits and Financial Statements Schedules." The following represent certain critical accounting policies that require us to exercise our business judgment or make significant estimates. Investment in Hotel Properties Investments in hotel properties, including land and land improvements, buildings and building improvements, furniture, fixtures and equipment, and identifiable intangible assets and liabilities, will generally be accounted for as asset acquisitions.
Our hotels are primarily operated and/or licensed by industry leaders such as Marriott, Hyatt, Fairmont, Kimpton, Loews, Hilton and The Kessler Collection. We plan to grow our business through a differentiated acquisition strategy, aggressive asset management and capital investment in our properties.
Our hotels are primarily operated and/or licensed by industry leaders such as Marriott, Hyatt, Fairmont, Kimpton, Loews, Hilton, The Kessler Collection and Davidson. We plan to grow our business through a differentiated acquisition strategy, aggressive asset management and capital investment in our properties.
We consider the following policies critical because they require the most difficult, subjective and complex judgments and include estimates about matters that are inherently uncertain, involve various assumptions, require management judgment, and because they are important for understanding and evaluating our reported financial results.
We consider the following policies critical because they require the most difficult, subjective and complex judgments and include estimates about matters that are inherently uncertain, involve various assumptions, require management judgment, and because they are important for understanding and evaluating our 52 reported financial results.
It also includes the non-cash ground rent determined as part of the initial purchase price allocation at acquisition. • General and administrative expenses - These expenses primarily consist of compensation expense for our corporate staff and personnel supporting our business (including severance and non-cash stock compensation expense), office administrative and related expenses, legal and professional fees, and other corporate costs. 50 • Gain on business interruption insurance - These gains consists of insurance settlements for lost income that was covered per the terms of our respective insurance policies, which was in excess of insurance deductibles. • Other operating expenses - These expenses typically consist of legal fees, other professional fees, franchise taxes, pre-opening costs, other direct costs associated with our pursuit and acquisitions of hotel investments which are not ultimately consummated and hotel management transition efforts.
It also includes the non-cash ground rent determined as part of the initial purchase price allocation at acquisition. • General and administrative expenses - These expenses primarily consist of compensation expense for our corporate staff and personnel supporting our business (including non-cash stock compensation expense), office administrative and related expenses, legal and professional fees, and other corporate costs. • Gain on business interruption insurance - These gains consist of insurance settlements for lost income that was covered per the terms of our respective insurance policies, which was in excess of insurance deductibles. • Other operating expenses - These expenses typically consist of legal fees, other professional fees, franchise taxes, pre-opening costs, other direct costs associated with our pursuit and acquisitions of hotel investments which are not ultimately consummated and hotel management transition efforts.
New Accounting Pronouncements Not Yet Implemented See Note 2 to the accompanying consolidated financial statements included herein this Annual Report for additional information related to recently issued accounting pronouncements. 68
New Accounting Pronouncements Not Yet Implemented See Note 2 to the accompanying consolidated financial statements included herein this Annual Report for additional information related to recently issued accounting pronouncements.
Most of the agreements require that we reserve this cash in separate accounts. To the extent that the FF&E reserves are not available or adequate to cover the cost of the renovation, we may fund a portion of the renovation with cash on hand, borrowings from our revolving credit facility and/or other sources of available liquidity.
Most of the agreements require that we reserve this cash in separate accounts. To the extent that the FF&E reserves are not available or adequate to cover the cost of the renovation, we may fund a portion of the renovation with cash on hand, borrowings from our revolving line of credit and/or other sources of available liquidity.
We further adjust FFO for certain additional items that are not in Nareit’s definition of FFO such as hotel property acquisition, terminated transaction and pre-opening expenses, amortization of debt origination costs and share-based compensation, non-cash ground rent and straight-line rent expense, operating results from properties that are sold and other items we believe do not represent recurring operations.
We further adjust FFO for certain additional items that are not in Nareit’s definition of FFO such as terminated transaction and pre-opening expenses, amortization of debt origination costs and share-based compensation, non-cash ground rent and straight-line rent expense, operating results from properties that are sold and other items we believe do not represent recurring operations.
Corporate costs directly associated with our executive offices, personnel and other administrative costs are reflected as general and administrative expenses on the consolidated statements of operations and comprehensive (loss) income. Market Outlook The U.S. lodging industry has historically exhibited a strong correlation to U.S. GDP, which increased at an annual rate of approximately 2.1% during 2022, according to the U.S.
Corporate costs directly associated with our executive offices, personnel and other administrative costs are reflected as general and administrative expenses on the consolidated statements of operations and comprehensive income (loss). Market Outlook The U.S. lodging industry has historically exhibited a strong correlation to U.S. GDP, which increased at an annual rate of approximately 2.5% during 2023, according to the U.S.
Overview Xenia is a self-advised and self-administered REIT that invests primarily in uniquely positioned luxury and upper upscale hotels and resorts with a focus on the top 25 lodging markets as well as key leisure destinations in the United States ("U.S."). As of December 31, 2022, we owned 32 hotels and resorts, comprising 9,508 rooms across 14 states.
Overview Xenia is a self-advised and self-administered REIT that invests primarily in uniquely positioned luxury and upper upscale hotels and resorts with a focus on the top 25 lodging markets as well as key leisure destinations in the United States ("U.S."). As of December 31, 2023, we owned 32 hotels and resorts, comprising 9,514 rooms across 14 states.
Gain on business interruption insurance Gain on business interruption insurance was $2.5 million for the year ended December 31, 2022, which was attributed to $1.5 million in insurance proceeds for a portion of lost income at Loews New Orleans Hotel due to the impact of Hurricane Ida in August 2021 as well as $1.0 million in proceeds for lost income for certain properties in Texas due to the impact of the Texas winter storms in February 2021.
Gain on business interruption insurance was $2.5 million for the year ended December 31, 2022, which was attributed to $1.5 million in insurance proceeds for a portion of lost income associated with cancellations at Loews New Orleans Hotel due to the impact of Hurricane Ida in August 2021 as well as $1.0 million in proceeds for lost income associated with cancellations for properties in Texas due to the impact of the Texas winter storms in February 2021.
(6) During the year ended December 31, 2022, we recorded hurricane-related repair and cleanup costs of $1.3 million. During the year ended December 31, 2021, we recorded estimated hurricane-related repair and cleanup costs of $1.1 million related to the damage sustained at Loews New Orleans Hotel during Hurricane Ida.
During the year ended December 31, 2021, we recorded estimated hurricane-related repair and cleanup costs of $1.1 million related to the damage sustained at Loews New Orleans Hotel during Hurricane Ida.
Comparison of the year ended December 31, 2021 to the year ended December 31, 2020 This information is contained in "Part II - Item 7.
Comparison of the year ended December 31, 2022 to the year ended December 31, 2021 This information is contained in "Part II - Item 7.
In January 2023, XHR LP (the "Borrower") entered into a new $675 million senior unsecured credit facility comprised of a $450 million revolving line of credit (the “Revolving Line of Credit”), a $125 million term loan (the "Term Loan $125M") and a $100 million delayed draw term loan (the “Term Loan $100M” and, together with the Term Loan $125M, the "2023 Term Loans") pursuant to a Revolving Credit and Term Loan Agreement, dated as of January 10, 2023, by and among the Borrower, JPMorgan Chase Bank, N.A., as administrative agent, and the lenders and other parties thereto (the “2023 Credit Agreement”).
In January 2023, XHR LP (the "Borrower") entered into a new $675 million senior unsecured credit facility comprised of a $450 million revolving line of credit (the “revolving line of credit”), a $125 million initial term loan (the "2023 Initial Term Loan") and a $100 million delayed draw term loan (the “2023 Delayed Draw Term Loan” and, together with the 2023 Initial Term Loan, the "2023 Term Loans") pursuant to a Revolving Credit and Term Loan Agreement, dated as of January 10, 2023, by and among the Borrower, JPMorgan Chase Bank, N.A., as administrative agent, and the lenders and other parties party thereto (the “2023 Credit Agreement”).
In January 2023, XHR LP (the "Borrower") entered into a new $675 million senior unsecured credit facility comprised of a $450 million revolving line of credit (the "Revolving Line of Credit”), a $125 million term loan (the "Term Loan $125M") and a $100 million delayed draw term loan (the “Term Loan $100M” and, together with the Term Loan $125M, the "2023 Term Loans") pursuant to a Revolving Credit and Term Loan Agreement, dated as of January 10, 2023, by and among the Borrower, JPMorgan Chase Bank, N.A., as administrative agent, and the lenders and other parties thereto (the “2023 Credit Agreement”).
In January 2023, XHR LP (the "Borrower") entered into a new $675 million senior unsecured credit facility comprised of a $450 million revolving line of credit (the “revolving line of credit”), a $125 million initial term loan (the "2023 Initial Term Loan) and a $100 million delayed draw term loan (the “2023 Delayed Draw Term Loan” and, together with the 2023 Initial Term Loan, the "2023 Term Loans") pursuant to a Revolving Credit and Term Loan Agreement, dated as of January 10, 2023, by and among the Borrower, JPMorgan Chase Bank, N.A., as administrative agent, and the lenders and other parties party thereto (the “2023 Credit Agreement”).
We have been and will continue to be prudent with respect to our capital spending, taking into account our cash flows from operations. As of December 31, 2022 and 2021, we had a total of $46.3 million and $29.3 million, respectively, of FF&E reserves.
We have been and will continue to be prudent with respect to our capital spending, taking into account our cash flows from operations. As of December 31, 2023 and 2022, we had a total of $49.7 million and $46.3 million, respectively, of FF&E reserves.
Cash flows from operating activities generally consist of the net cash generated by our hotel operations, offset by the cash paid for corporate expenses and other working capital changes. Our cash flows from operating activities may also be affected by changes in our portfolio resulting from hotel acquisitions, dispositions or renovations.
Cash flows from operating activities generally consist of the net cash generated by our hotel operations, partially offset by the cash paid for interest, corporate expenses and other working capital changes. Our cash flows from operating activities may also be affected by changes in our portfolio resulting from hotel acquisitions, dispositions or from disruption and subsequent improvements resulting from renovations.
The periods during which our hotels experience higher or lower levels of demand vary from property to property and depend upon location, type of property and competitive mix within the specific location.
The periods during which our hotels experience higher or lower levels of demand vary from property to property and depend upon location, type of property and competitive mix within the specific location. • Competition - The lodging industry is highly competitive.
Ground lease expense Ground lease expense increased $1.6 million, or 142.2%, to $2.8 million for the year ended December 31, 2022 from $1.2 million for the year ended December 31, 2021, which was primarily attributable to an increase in percentage rent in 2022, which is based on revenues at certain hotels with ground leases, compared to 2021.
Ground lease expense Ground lease expense increased $0.2 million, or 8.0%, to $3.0 million for the year ended December 31, 2023 from $2.8 million for the year ended December 31, 2022, which was primarily attributable to an increase in percentage rent in 2023, which is based on revenues at certain hotels with ground leases, compared to 2022.
The increase during the fourth quarter of 2022 reflected increases in private inventory investment, consumer spending, federal government spending, state and local government spending, and nonresidential fixed investment, as well as decreases in imports that were partially offset by decreases in residential fixed investment and exports.
The increase during the fourth quarter of 2023 reflected increases in consumer spending, exports, state and local government spending, federal government spending, private inventory investment, and residential and nonresidential fixed investment that were partially offset by an increase in imports.
(2) During the year ended December 31, 2022, we recorded $3.6 million of insurance proceeds in excess of recognized losses related to damage sustained at Loews New Orleans Hotel during Hurricane Ida in August 2021.
(2) During the years ended December 31, 2023 and 2022, we recorded $0.5 million and $3.6 million, respectively, of insurance proceeds in excess of recognized losses related to damage sustained at Loews New Orleans Hotel during Hurricane Ida in August 2021.
(2) During the year ended December 31, 2022, we recorded $3.6 million of insurance proceeds in excess of recognized losses related to damage sustained at Loews New Orleans Hotel during Hurricane Ida in August 2021.
(2) During the years ended December 31, 2023 and 2022, we recorded $0.5 million and $3.6 million, respectively, of insurance proceeds in excess of recognized losses related to damage sustained at Loews New Orleans Hotel during Hurricane Ida in August 2021.
Derivatives expose the Company to credit risk in the event of non-performance by the counterparties under the terms of the interest rate hedge agreements. The Company believes it minimizes the credit risk by transacting with well-known creditworthy financial institutions. On March 5, 2021, the U.K.
Derivatives expose the Company to credit risk in the event of non-performance by the counterparties under the terms of the interest rate hedge agreements. The Company believes it minimizes this credit risk by transacting with well-known creditworthy financial institutions.
Refer to the "Results of Operations" section for further discussion of our operating results for the years ended December 31, 2022 and 2021. Investing • Cash used in investing activities was $265.4 million and $24.2 million for the year ended December 31, 2022 and 2021, respectively.
Refer to the "Results of Operations" section for further discussion of our operating results for the years ended December 31, 2023 and 2022. Investing • Cash used in investing activities was $118.8 million and $265.4 million for the years ended December 31, 2023 and 2022, respectively.
(2) During the year ended December 31, 2022, we disposed of three hotels with 495 rooms and reduced the room count by two at Hyatt Regency Scottsdale Resort & Spa at Gainey Ranch. During the year ended December 31, 2021, we disposed of one hotel with 352 rooms.
During the year ended December 31, 2022, we acquired the 346-room W Nashville. (2) During the year ended December 31, 2022, we disposed of three hotels with 495 rooms and reduced the room count by two at Hyatt Regency Scottsdale Resort & Spa at Gainey Ranch.
Factors that May Affect Results of Operations The principal factors affecting our operating results include overall demand for hotel rooms compared to the supply of available hotel rooms, economic conditions, and the ability of our third-party management companies to increase or maintain revenues while controlling expenses. • Demand and economic conditions - Consumer demand for lodging, especially business travel, is closely linked to the performance of the overall economy and is sensitive to business and personal discretionary spending levels.
Thus, changes in ADR have a more significant impact on operating margins than changes in occupancy. 51 Factors that May Affect Results of Operations The principal factors affecting our operating results include overall demand for hotel rooms compared to the supply of available hotel rooms, economic conditions, and the ability of our third-party management companies to increase or maintain revenues while controlling expenses. • Demand and economic conditions - Consumer demand for lodging, especially business travel, is closely linked to the performance of the overall economy and is sensitive to business and personal discretionary spending levels.
Our weighted-average debt maturity as of December 31, 2022 was 2.8 years for our mortgage loans, 4.2 years for our corporate credit facility term loan, the Senior Notes, and revolving credit facility and 3.9 years for all debt.
Our weighted-average debt maturity as of December 31, 2023 was 3.2 years for our mortgage loans, 3.3 years for our corporate credit facility term loans, the Senior Notes, and revolving line of credit and 3.3 years for all debt.
We believe that Adjusted FFO provides investors with useful supplemental information that may facilitate comparisons of ongoing operating performance between periods and between REITs that make similar adjustments to FFO and is beneficial to investors’ complete understanding of our operating performance. 59 The following is a reconciliation of net income (loss) to EBITDA, EBITDAre and Adjusted EBITDAre attributable to common stock and unit holders for the years ended December 31, 2022, 2021, and 2020 (in thousands): Year Ended December 31, 2022 2021 2020 Net income (loss) $ 57,630 $ (146,615) $ (166,886) Adjustments: Interest expense 82,727 81,285 61,975 Income tax expense (benefit) 2,205 718 (15,867) Depreciation and amortization 132,648 129,393 146,511 EBITDA $ 275,210 $ 64,781 $ 25,733 Impairment of investment properties (1) — 28,899 29,044 (Gain) loss on sale of investment properties (27,286) 75 (93,630) EBITDAre $ 247,924 $ 93,755 $ (38,853) Depreciation and amortization related to corporate assets (444) (409) (392) Gain on insurance recoveries (2) (3,550) — — Loss on extinguishment of debt 294 1,356 1,625 Terminated transaction costs — 1 994 Amortization of share-based compensation expense (3) 11,411 11,615 10,930 Non-cash ground rent and straight-line rent expense 44 118 145 Other income attributed to forfeited deposits from terminated transactions (4) — — (28,750) Other non-recurring expenses (5) 1,309 1,622 2,568 Adjusted EBITDAre attributable to common stock and unit holders $ 256,988 $ 108,058 $ (51,733) (1) During the year ended December 31, 2021, we recognized impairment charges of $12.6 million and $15.7 million related to Marriott Charleston Town Center and Kimpton Hotel Monaco Chicago, respectively, which were attributed to their respective net book value exceeding the undiscounted cash flows over a shortened hold period.
We believe that Adjusted FFO provides investors with useful supplemental information that may facilitate comparisons of ongoing operating performance between periods and between REITs that make similar adjustments to FFO and is beneficial to investors’ complete understanding of our operating performance. 60 The following is a reconciliation of net income (loss) to EBITDA, EBITDAre and Adjusted EBITDAre attributable to common stock and unit holders for the years ended December 31, 2023, 2022, and 2021 (in thousands): Year Ended December 31, 2023 2022 2021 Net income (loss) $ 19,874 $ 57,630 $ (146,615) Adjustments: Interest expense 84,997 82,727 81,285 Income tax expense 1,447 2,205 718 Depreciation and amortization 132,023 132,648 129,393 EBITDA $ 238,341 $ 275,210 $ 64,781 Impairment of investment properties (1) — — 28,899 (Gain) loss on sale of investment properties — (27,286) 75 EBITDAre $ 238,341 $ 247,924 $ 93,755 Depreciation and amortization related to corporate assets (348) (444) (409) Gain on insurance recoveries (2) (535) (3,550) — Loss on extinguishment of debt 1,189 294 1,356 Terminated transaction costs — — 1 Amortization of share-based compensation expense 13,168 11,411 11,615 Non-cash ground rent and straight-line rent expense (75) 44 118 Other non-recurring expenses (3) — 1,309 1,622 Adjusted EBITDAre attributable to common stock and unit holders $ 251,740 $ 256,988 $ 108,058 (1) During the year ended December 31, 2021, we recognized impairment charges of $12.6 million and $15.7 million related to Marriott Charleston Town Center and Kimpton Hotel Monaco Chicago, respectively, which were attributed to their respective net book value exceeding the undiscounted cash flows over a shortened hold period.
Increases in occupancy are accompanied by increases in most categories of variable operating expenses, while increases in ADR typically only result in increases in limited categories of operating costs and expenses, such as management fees and franchise fees, which are based on hotel revenues. Thus, changes in ADR have a more significant impact on operating margins than changes in occupancy.
Increases in occupancy are accompanied by increases in most categories of variable operating expenses, while increases in ADR typically only result in increases in limited categories of operating costs and expenses, such as management fees and franchise fees, which are based on hotel revenues.
The restricted cash as of December 31, 2022 primarily consisted of $46.3 million related to FF&E reserves as required per the terms of our management and franchise agreements, $8.2 million in deposits made for capital projects, cash held in restricted escrows of $4.2 million primarily for real estate taxes and mortgage escrows and $2.1 million for disposition-related holdbacks.
The restricted cash as of December 31, 2023 primarily consisted of $49.7 million related to FF&E reserves as required per the terms of our management and franchise agreements, $7.1 million in deposits made for capital projects and cash held in restricted escrows of $1.5 million primarily for real estate taxes and mortgage escrows.
After June 1, 2024, we may also redeem the Senior Notes at certain redemption prices that decline ratably to par. We may also redeem a portion of the Senior Notes with proceeds from certain equity offerings or certain support received from government authorities in connection with the COVID-19 global pandemic, subject to certain conditions.
We may also redeem a portion of the Senior Notes with proceeds from certain equity offerings or certain support received from government authorities in connection with the COVID-19 global pandemic, subject to certain conditions.
We may also elect to use cash to buy back our common stock in the future under the Repurchase Program. 66 Comparison of the Year Ended December 31, 2022 to the Year Ended December 31, 2021 The table below presents summary cash flow information for the consolidated statements of cash flows (in thousands): Year Ended December 31, 2022 2021 Net cash provided by operating activities $ 187,129 $ 40,763 Net cash used in investing activities (265,393) (24,210) Net cash (used in) provided by financing activities (110,057) 108,892 Net (decrease) increase in cash and cash equivalents and restricted cash $ (188,321) $ 125,445 Cash and cash equivalents and restricted cash, at beginning of year 554,231 428,786 Cash and cash equivalents and restricted cash, at end of year $ 365,910 $ 554,231 Operating • Cash provided by operating activities was $187.1 million and $40.8 million for the year ended December 31, 2022 and 2021, respectively.
We may also elect to use cash to buy back our common stock in the future under the Repurchase Program. 66 Comparison of the Year Ended December 31, 2023 to the Year Ended December 31, 2022 The table below presents summary cash flow information for the consolidated statements of cash flows (in thousands): Year Ended December 31, 2023 2022 Net cash provided by operating activities $ 198,065 $ 187,129 Net cash used in investing activities (118,752) (265,393) Net cash used in financing activities (222,148) (110,057) Net decrease in cash and cash equivalents and restricted cash $ (142,835) $ (188,321) Cash and cash equivalents and restricted cash, at beginning of year 365,910 554,231 Cash and cash equivalents and restricted cash, at end of year $ 223,075 $ 365,910 Operating • Cash provided by operating activities was $198.1 million and $187.1 million for the years ended December 31, 2023 and 2022, respectively.
In addition, during the year ended December 31, 2020, we incurred non-recurring legal costs of $0.7 million to amend the terms of our debt. 60 The following is a reconciliation of net income (loss) to FFO and Adjusted FFO for the years ended December 31, 2022, 2021, and 2020 (in thousands): Year Ended December 31, 2022 2021 2020 Net income (loss) $ 57,630 $ (146,615) $ (166,886) Adjustments: Depreciation and amortization related to investment properties 132,204 128,984 146,119 Impairment of investment properties (1) — 28,899 29,044 (Gain) loss on sale of investment property (27,286) 75 (93,630) FFO attributable to common stock and unit holders $ 162,548 $ 11,343 $ (85,353) Reconciliation to Adjusted FFO Gain on insurance recoveries (2) (3,550) — — Loss on extinguishment of debt 294 1,356 1,625 Terminated transaction costs — 1 994 Loan related costs, net of adjustment related to non-controlling interests (3) 5,260 5,952 3,874 Amortization of share-based compensation expense (4) 11,411 11,615 10,930 Non-cash ground rent and straight-line rent expense 44 118 145 Other income attributed to forfeited deposits from terminated transactions (5) — — (28,750) Other non-recurring expenses (income) (6) 1,309 1,622 2,568 Adjusted FFO attributable to common stock and unit holders $ 177,316 $ 32,007 $ (93,967) (1) During the year ended December 31, 2021, we recognized impairment charges of $12.6 million and $15.7 million related to Marriott Charleston Town Center and Kimpton Hotel Monaco Chicago, respectively, which were attributed to their respective net book value exceeding the undiscounted cash flows over a shortened hold period.
Additionally, during the year ended December 31, 2021, we recorded Texas winter storm-related repair and cleanup costs of $0.4 million at two hotels. 61 The following is a reconciliation of net income (loss) to FFO and Adjusted FFO for the years ended December 31, 2023, 2022, and 2021 (in thousands): Year Ended December 31, 2023 2022 2021 Net income (loss) $ 19,874 $ 57,630 $ (146,615) Adjustments: Depreciation and amortization related to investment properties 131,675 132,204 128,984 Impairment of investment properties (1) — — 28,899 (Gain) loss on sale of investment property — (27,286) 75 FFO attributable to common stock and unit holders $ 151,549 $ 162,548 $ 11,343 Reconciliation to Adjusted FFO Gain on insurance recoveries (2) (535) (3,550) — Loss on extinguishment of debt 1,189 294 1,356 Terminated transaction costs — — 1 Loan related costs, net of adjustment related to non-controlling interests (3) 4,915 5,260 5,952 Amortization of share-based compensation expense 13,168 11,411 11,615 Non-cash ground rent and straight-line rent expense (75) 44 118 Other non-recurring expenses (4) — 1,309 1,622 Adjusted FFO attributable to common stock and unit holders $ 170,211 $ 177,316 $ 32,007 (1) During the year ended December 31, 2021, we recognized impairment charges of $12.6 million and $15.7 million related to Marriott Charleston Town Center and Kimpton Hotel Monaco Chicago, respectively, which were attributed to their respective net book value exceeding the undiscounted cash flows over a shortened hold period.
The Revolving Line of Credit and the Term Loan $125M refinanced in full our existing corporate credit facilities and, as a result of such refinancing, the pledges of equity of certain subsidiaries securing obligations under the Amended Credit Agreements and the Senior Notes were released.
The revolving line of credit and the 2023 Initial Term Loan refinanced in full the then existing corporate credit facilities, and as a result of such refinancing, the then existing pledges of equity of certain subsidiaries securing obligations under the Company's prior corporate credit facilities were released.
These increases were partially offset by a $1.0 million reduction in real estate taxes and a $2.0 million reduction related to the one hotel sold in 2021 and the three hotels sold in 2022.
These increases were partially offset by a $0.9 million reduction in real estate taxes, personal property taxes and insurance related to the three hotels sold in 2022.
During the fourth quarter of 2022, GDP increased at an annual rate of 2.9%, representing an increase from the annual rate of 3.2% in the third quarter of 2022.
During the fourth quarter of 2023, GDP increased at an annual rate of 3.3%, representing a decrease from the annual rate of 4.9% in the third quarter of 2023.
Debt as of December 31, 2022 and December 31, 2021 consisted of the following (dollars in thousands): Rate Type Rate (1) Maturity Date December 31, 2022 December 31, 2021 Mortgage Loans Renaissance Atlanta Waverly Hotel & Convention Center Variable (2) 7.03 % 8/14/2024 $ 99,590 $ 100,000 Andaz Napa Variable (3) 6.29 % 9/13/2024 54,560 55,640 The Ritz-Carlton, Pentagon City Fixed (4) — % — — 65,000 Grand Bohemian Hotel Orlando, Autograph Collection Fixed 4.53 % 3/1/2026 55,685 56,796 Marriott San Francisco Airport Waterfront Fixed 4.63 % 5/1/2027 110,153 112,102 Total Mortgage Loans 5.64 % (5) $ 319,988 $ 389,538 Corporate Credit Facilities Corporate Credit Facility Term Loan $125M Variable (6) 5.84 % 9/13/2024 125,000 125,000 Revolving Credit Facility Variable (7) 6.14 % 2/28/2024 — — Total Corporate Credit Facilities $ 125,000 $ 125,000 2020 Senior Notes $500M Fixed 6.38 % 8/15/2025 500,000 500,000 2021 Senior Notes $500M Fixed 4.88 % 6/1/2029 500,000 500,000 Loan premiums, discounts and unamortized deferred financing costs, net (8) (15,883) (20,307) Total Debt, net of loan premiums, discounts and unamortized deferred financing costs 5.65 % (5) $ 1,429,105 $ 1,494,231 (1) The rates shown represent the annual interest rates as of December 31, 2022.
Debt as of December 31, 2023 and December 31, 2022 consisted of the following (dollars in thousands): Rate Type Rate (1) Maturity Date December 31, 2023 December 31, 2022 Mortgage Loans Renaissance Atlanta Waverly Hotel & Convention Center Fixed (2) — % 8/14/2024 $ — $ 99,590 Grand Bohemian Hotel Orlando, Autograph Collection Fixed 4.53 % 3/1/2026 54,522 55,685 Marriott San Francisco Airport Waterfront Fixed 4.63 % 5/1/2027 108,111 110,153 Andaz Napa Fixed (3) 5.72 % 1/19/2028 55,000 54,560 Total Mortgage Loans 4.88 % (4) $ 217,633 $ 319,988 Corporate Credit Facilities Corporate Credit Facility Term Loan $125M Variable (5) — % 9/13/2024 — 125,000 2023 Initial Term Loan Fixed (5) 5.50 % 3/1/2026 $ 125,000 — 2023 Delayed Draw Term Loan Fixed (5) 5.50 % 3/1/2026 $ 100,000 — Revolving Credit Facility Variable (6) — % 2/28/2024 $ — — Revolving Line of Credit (2023) Variable (6) 7.11 % 1/11/2027 $ — — Total Corporate Credit Facilities $ 225,000 $ 125,000 2020 Senior Notes $500M (7) Fixed 6.38 % 8/15/2025 464,747 500,000 2021 Senior Notes $500M Fixed 4.88 % 6/1/2029 500,000 500,000 Loan premiums, discounts and unamortized deferred financing costs, net (8) (12,474) (15,883) Total Debt, net of loan premiums, discounts and unamortized deferred financing costs 5.47 % (4) $ 1,394,906 $ 1,429,105 (1) The rates shown represent the annual interest rates as of December 31, 2023.
In accordance with the terms of the ATM Agreement, the Company may from time to time offer and sell shares of its common stock having an aggregate gross offering price of up to $200 million. No shares were sold under the ATM Agreement during the years ended December 31, 2022, 2021 and 2020.
In accordance with the terms of the ATM Agreement, the Company may from time to time offer and sell shares of its common stock having an aggregate gross offering price of up to $200 million.
Portfolio Composition As of December 31, 2022 and 2021, the Company owned 32 lodging properties with a total of 9,508 rooms and owned 34 lodging properties with a total of 9,659 rooms, respectively. As of December 31, 2020, the Company owned 35 lodging properties with a total of 10,011 rooms.
Portfolio Composition As of December 31, 2023 and 2022, the Company owned 32 lodging properties with a total of 9,514 and 9,508 rooms, respectively.
The loss on extinguishment of debt during 2022 was attributable to the write-off of unamortized debt issuance costs upon the early repayment of one mortgage loan.
The loss on extinguishment of debt of $0.3 million for the year ended December 31, 2022 was attributable to the write-off of unamortized debt issuance costs upon the early repayment of one mortgage loan.
(5) During the years ended December 31, 2022, we recorded hurricane-related repair and cleanup costs of $1.3 million. During the year ended December 31, 2021, we recorded estimated hurricane-related repair and cleanup costs of $1.1 million related to the damage sustained at Loews New Orleans Hotel during Hurricane Ida.
During the year ended December 31, 2021, we recorded estimated hurricane-related repair and cleanup costs of $1.1 million related to the damage sustained at Loews New Orleans Hotel during Hurricane Ida. Additionally, during the year ended December 31, 2021, we recorded Texas winter storm-related repair and cleanup costs of $0.4 million at two hotels.
As a result, we had $200 million available for sale under the ATM program as of December 31, 2021.
As of December 31, 2023, we had $200 million available for sale under the ATM Agreement.
The increase in our total portfolio RevPAR for the year ended December 31, 2022 compared to the same period in 2021 was driven by increases in both occupancy and ADR due to a broad-based recovery from the COVID-19 pandemic.
The increase in our total portfolio RevPAR for the year ended December 31, 2023 compared to the same period in 2022 was driven by increases in both occupancy and ADR.
Liquidity and Capital Resources We expect to meet our short-term liquidity requirements from cash on hand, cash flow from hotel operations, use of our unencumbered asset base, asset dispositions, borrowings under our revolving credit facility, and proceeds from various capital market transactions, including issuances of debt and equity securities.
We strongly encourage investors to review our financial information in its entirety and not to rely on a single financial measure. 62 Liquidity and Capital Resources We expect to meet our short-term liquidity requirements from cash on hand, cash flow from hotel operations, use of our unencumbered asset base, asset dispositions, borrowings under our revolving line of credit, and proceeds from various capital market transactions, including issuances of debt and equity securities.
Off-Balance Sheet Arrangements As of December 31, 2022, we had various contracts outstanding with third-parties in connection with the renovation of certain of our hotel properties. The remaining commitments under these contracts at December 31, 2022 totaled $12.1 million.
As of December 31, 2023, the Company had approximately $133.7 million remaining under its share repurchase authorization. Off-Balance Sheet Arrangements As of December 31, 2023, we had various contracts outstanding with third-parties in connection with the renovation of certain of our hotel properties. The remaining commitments under these contracts at December 31, 2023 totaled $67.8 million.
The Revolving Line of Credit and the Term Loan $125M refinanced in full our existing corporate credit facilities, and as a result of such refinancing, the pledges of equity of certain subsidiaries securing obligations under the Amended Credit Agreements and the Senior Notes were released.
The revolving line of credit and the 2023 Initial Term Loan refinanced in full the then existing corporate credit facilities outstanding under the prior agreement, and as a result of such refinancing, the then existing pledges of equity of certain subsidiaries securing obligations under the Company's prior credit facilities were released.
The 2023 Term Loans mature in March 2026, can be extended up to an additional year, and bear interest rates consistent with the pricing grid on the Revolving Line of Credit.
The 2023 Term Loans mature in March 2026, can be extended up to an additional year and bear interest rates consistent with the pricing grid on the revolving line of credit. As of December 31, 2023, there was no outstanding balance on our revolving line of credit and the full $450 million was available to be borrowed.
While we do not currently have any derivative instruments, we have had and, in the future, may enter into derivative instruments including interest rate swaps, caps and collars to manage or hedge interest rate risk in accordance with the criteria of the hedging policy approved by our Board of Directors.
Derivative Instruments In the normal course of business, we are exposed to the effects of interest rate changes. We may enter into derivative instruments including interest rate swaps, caps and collars to manage or hedge interest rate risk in accordance with the criteria of the hedging policy approved by our Board of Directors.
Cash provided by investing activities for the year ended December 31, 2021 was attributed to $31.8 million in capital improvements at our hotel properties which was partially offset by $4.7 million in net proceeds from the disposition of Marriott Charleston Town Center and $2.9 million of performance guaranty payments received that were recorded as a reduction in the respective hotel's cost basis.
Cash used in investing activities for the year ended December 31, 2023 was attributed to $120.9 million in capital improvements at our hotel properties, which was partially offset by $1.6 million of performance guaranty payments received that were recorded as a reduction in the respective hotel's cost basis and $0.5 million of proceeds from property insurance.
In addition, EBITDA is used as one measure in determining the value of hotel acquisitions and dispositions and along with FFO and Adjusted FFO, it is used by management in the annual budget process for compensation programs.
In addition, EBITDA is used as one measure in determining the value of hotel acquisitions and dispositions and along with FFO and Adjusted FFO is used by management in the annual budget process for compensation programs. We then calculate EBITDAre in accordance with standards established by the National Association of Real Estate Investment Trusts ("Nareit").
During the year ended December 31, 2022, the Company did not incur interest expense on the revolving credit facility, and incurred interest expense of $1.9 million and $8.6 million during the years ended December 31, 2021 and 2020, respectively.
During the years ended December 31, 2023, 2022 and 2021, the Company incurred unused commitment fees of approximately $1.4 million each year. During the years ended December 31, 2023 and 2022, the Company did not incur interest expense on the revolving line of credit. During the year ended December 31, 2021, the Company incurred interest expense of $1.9 million.
In addition, during the year ended December 31, 2020, we incurred non-recurring legal costs of $0.7 million to amend the terms of our debt. 61 Use and Limitations of Non-GAAP Financial Measures EBITDA, EBITDAre, Adjusted EBITDAre, FFO, and Adjusted FFO do not represent cash generated from operating activities under GAAP and should not be considered as alternatives to net income or loss, operating profit, cash flows from operations or any other operating performance measure prescribed by GAAP.
Use and Limitations of Non-GAAP Financial Measures EBITDA, EBITDAre, Adjusted EBITDAre, FFO, and Adjusted FFO do not represent cash generated from operating activities under GAAP and should not be considered as alternatives to net income or loss, operating profit, cash flows from operations or any other operating performance measure prescribed by GAAP.
These gains on insurance recovery are included in other income (loss) on the consolidated statement of operations and comprehensive income (loss) for the period then ended. (3) Loan related costs included amortization of debt premiums, discounts and deferred loan origination costs.
These gains on insurance recovery are included in other income (loss) on the consolidated statements of operations and comprehensive income (loss) for the periods then ended. (3) Loan related costs included amortization of debt premiums, discounts and deferred loan origination costs. (4) During the year ended December 31, 2022, we recorded hurricane-related repair and cleanup costs of $1.3 million.
Demand increased 11.0% and new hotel supply increased by 1.9% during the year ended December 31, 2022 compared to 2021. The increase in demand led to an increase in industry RevPAR of 29.8% for the year ended December 31, 2022 compared to 2021, which was driven by an increase in occupancy of 8.9% coupled with a 19.1% increase in ADR.
The increase in demand led to an increase in industry RevPAR of 4.9% for the year ended December 31, 2023 compared to 2022, which was driven by an increase in occupancy of 0.6% coupled with a 4.3% increase in ADR.
Other income (loss) Other income increased $6.5 million, or 281.9%, to other income of $4.2 million for the year ended December 31, 2022 from a loss of $2.3 million for the year ended December 31, 2021.
Other income (loss) Other income increased $5.7 million, or 136.8%, to $9.9 million for the year ended December 31, 2023 from $4.2 million for 58 the year ended December 31, 2022.
The Revolving Line of Credit matures in January 2027 and can be extended up to an additional year. The interest rate on the Revolving Line of Credit is based on a pricing grid with a range of 145 to 275 basis points over the applicable Term SOFR rate as determined by the Company’s leverage ratio.
The interest rate on the revolving line of credit is based on a pricing grid with a range of 145 to 275 basis points over the applicable Term SOFR rate as determined by the Company’s leverage ratio, subject to a 10-basis point credit spread adjustment and a zero basis point floor.
The Revolving Line of Credit matures in January 2027 and can be extended up to an additional year. The interest rate on the Revolving Line of Credit is based on a pricing grid with a range of 145 to 275 basis points over the applicable Term SOFR rate as determined by the Company’s leverage ratio.
The interest rate on the revolving line of credit is based on a pricing grid with a range of 145 to 275 basis points over the applicable Term SOFR rate as determined by the Company’s leverage ratio, subject to a 10 basis point credit spread adjustment and a zero basis point floor.
Income tax expense Income tax expense increased $1.5 million, or 207.1%, to $2.2 million for the year ended December 31, 2022 from $0.7 million for the year ended December 31, 2021.
Income tax expense Income tax expense decreased $0.8 million, or 34.4%, to $1.4 million for the year ended December 31, 2023 from $2.2 million for the year ended December 31, 2022.
Nareit defines EBITDAre as EBITDA plus or minus losses and gains on the disposition of depreciated property, including gains/losses on change of control, plus impairment write-downs of depreciated property and of investments in unconsolidated affiliates caused by a decrease in value of depreciated property in the affiliate, and adjustments to reflect the entity's share of EBITDAre of unconsolidated affiliates.
Nareit defines EBITDAre as EBITDA plus or minus losses and gains on the disposition of depreciated property, including gains or losses on change of control, plus impairment write-downs of depreciated property and of investments in unconsolidated affiliates caused by a decrease in value of depreciated property in the affiliate, and adjustments to reflect the entity's share of EBITDAre of unconsolidated affiliates. 59 We further adjust EBITDAre to exclude the impact of non-controlling interests in consolidated entities other than our Operating Partnership Units because our Operating Partnership Units may be redeemed for common stock.
The increase was primarily attributed to a gain of $3.6 million from insurance proceeds settlements in excess of recognized losses associated with hurricane-related damage at Loews New Orleans Hotel as well as interest income of $2.2 million for the year ended December 31, 2022, offset by $1.6 million of costs associated with the termination of two interest rate hedges for the year ended December 31, 2022.
Other income for the year ended December 31, 2022 was primarily attributable a $3.6 million gain on insurance recovery associated with hurricane-related damage at Loews New Orleans Hotel which was partially offset by costs associated with the termination of two interest rate swaps.
Results of Non-Operating Income and Expenses Non-operating income and expenses consist of the following (in thousands): Year Ended December 31, 2022 2021 Increase / (Decrease) % Change Non-operating income and expenses: Gain (loss) on sale of investment properties $ 27,286 $ (75) $ 27,361 36,481.3 % Other income (loss) 4,178 (2,297) 6,475 281.9 % Interest expense (82,727) (81,285) 1,442 1.8 % Loss on extinguishment of debt (294) (1,356) (1,062) (78.3) % Income tax expense (2,205) (718) 1,487 207.1 % Gain (loss) on sale of investment properties The gain on sale for the year ended December 31, 2022 was attributed to the disposition of Bohemian Hotel Celebration, Autograph Collection in October 2022 and Kimpton Hotel Monaco Denver in December 2022.
Results of Non-Operating Income and Expenses Non-operating income and expenses consist of the following (in thousands): Year Ended December 31, 2023 2022 Change % Change Non-operating income and expenses: Gain (loss) on sale of investment properties $ — $ 27,286 $ (27,286) (100.0) % Other income (loss) 9,895 4,178 5,717 136.8 % Interest expense (84,997) (82,727) 2,270 2.7 % Loss on extinguishment of debt (1,189) (294) 895 304.4 % Income tax expense (1,447) (2,205) (758) (34.4) % Gain (loss) on sale of investment properties The gain on sale of investment properties for the year ended December 31, 2022 was attributed to the disposition of Bohemian Hotel Celebration, Autograph Collection in October 2022 and Kimpton Hotel Monaco Denver in December 2022.
In January 2023, the Company amended this mortgage loan to update the variable index from one-month LIBOR to Term SOFR and extend the maturity date through January 2028. (4) A variable interest rate loan for which the interest rate was fixed through January 2023.
(3) In January 2023, the Company amended this mortgage loan to update the variable index from one-month LIBOR to Term SOFR, increase the credit spread, increase the principal amount to $55 million and extend the maturity date through January 2028. Term SOFR has been fixed with interest rate swaps through January 1, 2027.
During the year ended December 31, 2022 and 2021, we made total capital expenditures of $70.4 million and $31.8 million, respectively. Sources and Uses of Cash Our principal sources of cash are cash flows from operations, borrowings under debt financings including draws on our revolving credit facility and from various types of equity offerings or the sale of our hotels.
Sources and Uses of Cash Our principal sources of cash are cash flows from operations, borrowings under debt financings including draws on our revolving line of credit and from various types of equity offerings or the sale of our hotels.
Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the year ended December 31, 2021 filed with the SEC on March 1, 2022, and is incorporated herein by reference. 58 Non-GAAP Financial Measures We consider the following non-GAAP financial measures useful to investors as key supplemental measures of our operating performance: EBITDA, EBITDAre, Adjusted EBITDAre, FFO and Adjusted FFO.
Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the year ended December 31, 2022 filed with the SEC on March 2, 2023, and is incorporated herein by reference.
Food and beverage expenses also includes costs for severance and furloughed employee benefits. • Other direct expenses - These expenses primarily include labor (including severance and furloughed employee benefits) and other costs associated with other revenues, such as parking and other guest services. • Other indirect expenses - These expenses primarily include hotel costs associated with general and administrative, state sales and excise taxes, sales and marketing, information technology and telecommunications, repairs and maintenance and utility costs. • Management and franchise fees - Base management fees are computed as a percentage of gross revenue.
Occupancy and the type of customer staying at the hotel are major drivers of food and beverage expense (i.e., 50 catered functions generally are more profitable than on-property food and beverage outlet sales), which correlates closely with food and beverage revenue. • Other direct expenses - These expenses primarily include labor and other costs associated with other revenues, such as parking and other guest services. • Other indirect expenses - These expenses primarily include hotel costs associated with general and administrative, state sales and excise taxes, sales and marketing, information technology and telecommunications, repairs and maintenance and utility costs. • Management and franchise fees - Base management fees are computed as a percentage of gross revenue.
Liquidity As of December 31, 2022, we had $305.1 million of consolidated cash and cash equivalents and $60.8 million of restricted cash and escrows.
Liquidity As of December 31, 2023, we had $164.7 million of consolidated cash and cash equivalents and $58.4 million of restricted cash and escrows.
Cash provided by financing activities for the year ended December 31, 2021 was attributed to $500.0 million in proceeds from the issuance of the 2021 Senior Notes, offset by the repayment of the revolving credit facility of $163.1 million, the repayment of the corporate credit facility term loan maturing in 2023 totaling $150.0 million, the repayment of mortgage debt totaling $56.8 million, payment of loan fees and issuance costs of $10.2 million, principal payments of mortgage debt totaling $6.0 million, redemption of Operating Partnership Units for common stock and cash of $4.1 million, and shares redeemed to satisfy tax withholding on vested share-based compensation of $0.9 million.
Cash used in financing activities for the year ended December 31, 2023 was attributed to (i) the repurchase of common stock totaling $132.7 million, (ii) the repayment of the prior corporate credit facility term loan maturing in 2024 totaling $125.0 million, (iii) the repayment of mortgage debt totaling $99.5 million, (iv) the payment of $44.6 million in dividends, (v) the expenditure of $34.9 million for the repurchase and retirement of $35.3 million aggregate principal of 6.375% 2020 Senior Notes, (vi) the payment of loan fees and issuance costs of $5.6 million, (vii) principal payments of mortgage debt totaling $3.3 million, (viii) the redemption of Operating Partnership Units for common stock and cash of $1.4 million and (ix) shares redeemed to satisfy tax withholding on vested share-based compensation of $0.6 million, which was partially offset (y) by proceeds from the 2023 Term Loans totaling $225.0 million and (z) proceeds from the amendment of one mortgage loan of $0.4 million.
If we misjudge or estimate incorrectly or if future operating profitability, market or industry factors differ from our expectations, we may record an impairment charge which is inappropriate, fail to record a charge when we should have done so or the amount of such charges may be inaccurate.
If we misjudge or estimate incorrectly or if future operating profitability, market or industry factors differ from our expectations, we may record an impairment charge which is inappropriate, fail to record a charge when we should have done so, or the amount of such charges may be inaccurate. 53 Results of Operations Operating Results Overview Our total portfolio RevPAR, which includes the results of hotels sold or acquired for the period of ownership by the Company, increased 4.1% to $169.46 for the year ended December 31, 2023, compared to $162.75 for the year ended December 31, 2022.
Similar to rooms revenues, occupancy is the major driver of rooms expense and as a result, rooms expense has a significant correlation to rooms revenues. These costs as a percentage of revenue can increase based on increases in salaries, wages and benefits, as well as on the level of service and amenities that are provided.
These costs as a percentage of revenue can increase based on increases in salaries, wages and benefits, as well as on the level of service and amenities that are provided. • Food and beverage expenses - These expenses primarily include food, beverage and associated labor costs.
Financing • Cash used in financing activities during the year ended December 31, 2022 was $110.1 million and cash provided by financing activities was $108.9 million during year ended December 31, 2021.
Financing • Cash used in financing activities was $222.1 million and $110.1 million for the years ended December 31, 2023 and 2022, respectively.
Department of Commerce, in comparison to an increase of approximately 5.9% during 2021. The increase in GDP during the year ended December 31, 2022 reflected increases in consumer spending, exports, private inventory investment and nonresidential government spending which were partially offset by decreases in residential fixed investment and increases in imports.
The increase in GDP during the year ended December 31, 2023 reflected increases in consumer spending, nonresidential fixed investment, state and local government spending, exports, and federal government spending as well a decrease in imports that were partially offset by decreases in residential fixed investment and inventory investment.
The Term Loan $100M was funded on January 17, 2023 and was used to repay in full the mortgage loan collateralized by Renaissance Atlanta Waverly Hotel & Convention Center that was due August 2024. Proceeds from future Revolving Line of Credit borrowings may be used for working capital, general corporate or other purposes permitted by the 2023 Credit Agreement.
The 2023 Delayed Draw Term Loan was funded on January 17, 2023 and was used to repay in full the mortgage loan collateralized by Renaissance Atlanta Waverly Hotel & Convention Center that was due August 2024.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

9 edited+1 added−1 removed7 unchanged
Biggest changeIf market rates of interest on all of the variable rate debt as of December 31, 2021 permanently increased or decreased by 1%, the increase or decrease in interest expense on the variable rate debt would increase or decrease future earnings and cash flows by approximately $0.3 million per annum.
Biggest changeAs of December 31, 2023, all of our variable rate debt was fixed by interest rate swaps and, as a result, an increase or decrease of 1% in market interest rates would not have an impact on our interest expense, future earnings or cash flows through the date of the earliest maturity of our interest rate hedges, which is mid-February 2025.
If market rates of interest on all of our variable rate debt as of December 31, 2022 permanently increased or decreased by 1%, the increase or decrease in interest expense on the variable rate debt would increase or decrease future earnings and cash flows by approximately $2.8 million per annum.
If market rates of interest on all of the variable rate debt as of December 31, 2022 permanently increased or decreased by 1%, the increase or decrease in interest expense on the variable rate debt would increase or decrease future earnings and cash flows by approximately $2.8 million per annum.
We maintain risk management control systems to monitor interest rate cash flow risk attributable to both of our outstanding or forecasted debt obligations as well as our potential offsetting hedge positions.
We maintain risk management control systems to monitor interest rate cash flow risk attributable to both of our 68 outstanding or forecasted debt obligations as well as our potential offsetting hedge positions.
We maintain credit policies with regard to our counterparties that we believe reduce overall credit risk. These policies include evaluating and monitoring our counterparties' financial condition, including their credit ratings, and entering into agreements with counterparties based on established credit limit policies.
Credit risk is the failure of the counterparty to perform under the terms of the derivative contract. We maintain credit policies with regard to our counterparties that we believe reduce overall credit risk. These policies include evaluating and monitoring our counterparties' financial condition, including their credit ratings, and entering into agreements with counterparties based on established credit limit policies.
The decrease from prior period was driven by the management's efforts to repay or refinance variable rate debt with fixed rate debt. With regard to our variable rate financing, we assess interest rate cash flow risk by continually identifying and monitoring changes in interest rate exposures that may adversely impact expected future cash flows and by evaluating hedging opportunities.
With regard to our variable rate financing, we assess interest rate cash flow risk by continually identifying and monitoring changes in interest rate exposures that may adversely impact expected future cash flows and by evaluating hedging opportunities.
Also, existing fixed and variable rate loans that are scheduled to mature in the near term are evaluated for possible early refinancing or extension due to consideration given to current interest rates. We have taken significant steps in reducing our variable rate debt exposure by paying off property-level mortgage debt subject to floating rates.
Also, existing fixed and variable rate loans that are scheduled to mature in the near term are evaluated for possible early refinancing or extension due to consideration given to current interest rates.
Item 8. Financial Statements and Supplementary Data See Index to Financial Statements on page F-1. Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None. 69
(2) Includes all fixed rate debt and all variable rate debt that was swapped to fixed rates as of December 31, 2023. Item 8. Financial Statements and Supplementary Data See Index to Financial Statements on page F-1. Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None.
For debt obligations outstanding as of December 31, 2022, the following table presents principal repayments and related weighted-average interest rates by contractual maturity dates (in thousands): 2023 2024 2025 2026 2027 Thereafter Total Fair Value Maturing debt (1) : Fixed rate debt $ 3,205 $ 3,355 $ 503,512 $ 54,379 $ 101,386 $ 500,000 $ 1,165,837 $ 1,063,944 Variable rate debt 2,333 276,818 — — — — 279,151 277,914 Total $ 5,538 $ 280,173 $ 503,512 $ 54,379 $ 101,386 $ 500,000 $ 1,444,988 $ 1,341,858 Weighted-average interest rate on debt: Fixed rate debt 4.59% 4.59% 6.36% 4.53% 4.63% 4.88% 5.48% 5.94% Variable rate debt 6.69% 6.35% —% —% —% —% 6.35% 7.43% (1) The debt maturity excludes net mortgage loan discounts, premiums and unamortized deferred loan costs of $15.9 million as of December 31, 2022.
For debt obligations outstanding as of December 31, 2023, the following table presents principal repayments and related weighted-average interest rates by contractual maturity dates (in thousands): 2024 2025 2026 2027 2028 Thereafter Total Fair Value Maturing debt (1) : Fixed rate debt (2) $ 3,355 $ 469,178 $ 55,381 $ 101,386 $ — $ 500,000 $ 1,129,300 $ 1,094,684 Variable rate debt — — 225,000 1,002 52,078 — 278,080 271,000 Total $ 3,355 $ 469,178 $ 280,381 $ 102,388 $ 52,078 $ 500,000 $ 1,407,380 $ 1,365,684 Weighted-average interest rate on debt: Fixed rate debt (2) 4.59% 6.36% 4.56% 4.63% —% 4.88% 5.45% 5.75% Variable rate debt —% —% 5.50% 5.72% 5.72% —% 5.54% 7.44% (1) The debt maturity excludes net mortgage loan discounts, premiums and unamortized deferred loan costs of $12.5 million as of December 31, 2023.
We may continue to use derivative instruments to hedge exposures to changes in interest rates on loans secured by our properties. To the extent we do, we are exposed to credit risk and market risk. Credit risk is the failure of the counterparty to perform under the terms of the derivative contract.
Refer to Note 7 in the consolidated financial statements included herein this Annual Report for more information on our interest rate swap derivatives. We may continue to use derivative instruments to hedge exposure to changes in interest rates on loans secured by our properties. To the extent we do, we are exposed to credit risk and market risk.
Removed
In the past, we have used and, may in the future, use interest rate hedges to managing our exposure to interest rates.
Added
We have taken significant steps in reducing our variable rate debt exposure by paying off property-level mortgage debt subject to floating rates and entering into various interest rate swap agreements to hedge interest rate risk.

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