What changed in Summit Hotel Properties, Inc.'s 10-K — 2023 vs 2024
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Paragraph-level year-over-year comparison of Summit Hotel Properties, Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.
+295 added−317 removedSource: 10-K (2025-02-24) vs 10-K (2024-02-29)
Top changes in Summit Hotel Properties, Inc.'s 2024 10-K
295 paragraphs added · 317 removed · 116 edited across 9 sections
- Item 1A. Risk Factors+192 / −62 · 55 edited
- Item 7. Management's Discussion & Analysis+29 / −131
- Item 1. Business+41 / −62 · 35 edited
- Item 5. Market for Registrant's Common Equity+5 / −37 · 4 edited
- Item 2. Properties+15 / −13 · 13 edited
Item 1. Business
Business — how the company describes what it does
35 edited+6 added−27 removed55 unchanged
Item 1. Business
Business — how the company describes what it does
35 edited+6 added−27 removed55 unchanged
2023 filing
2024 filing
Biggest changeThe Phase I environmental site assessments were completed at various times and material environmental conditions, liabilities or compliance concerns may have arisen after the review was completed or may arise in the future; and future laws, ordinances or regulations may impose material additional environmental liability. 7 In addition, our lodging properties (including our real property, operations and equipment) are subject to various federal, state and local environmental, health and safety regulatory requirements that address a wide variety of issues, including, but not limited to, the potential transmission of infectious diseases, the existence of mold and other airborne contaminants above regulatory thresholds, the registration, maintenance and operation of our boilers and storage tanks, the supply of potable water to our guests, air emissions from emergency generators, storm water and wastewater discharges, protection of natural resources, asbestos, lead-based paint, and waste management.
Biggest changeIn addition, our lodging properties (including our real property, operations and equipment) are subject to various federal, state and local environmental, health and safety regulatory requirements that address a wide variety of issues, including, but not limited to, the potential transmission of infectious diseases, the existence of mold and other airborne contaminants above regulatory thresholds, the registration, maintenance and operation of our boilers and storage tanks, the supply of potable water to our guests, air emissions from emergency generators, storm water and wastewater discharges, protection of natural resources, asbestos, lead-based paint, and waste management.
None of the Phase I environmental site assessments of the lodging properties in our portfolio revealed any past or present environmental condition that we believe could have a material adverse effect on our business, consolidated financial position, or results of operations.
None of the Phase I environmental site assessments of the lodging properties in our portfolio revealed any past or present environmental condition that we believe could have a material adverse effect on our business, consolidated financial position, or consolidated results of operations.
Lodging properties in the northern U.S. tend to have higher occupancy rates during the summer months. 6 Regulation Our lodging properties are subject to various covenants, laws, ordinances and regulations, including regulations relating to accessibility, fire and safety requirements. We believe each of our lodging properties has the necessary permits and approvals to operate its business.
Lodging properties in the northern U.S. tend to have higher occupancy rates during the summer months. Regulation Our lodging properties are subject to various covenants, laws, ordinances and regulations, including regulations relating to accessibility, fire and safety requirements. We believe each of our lodging properties has the necessary permits and approvals to operate its business.
Since establishing our Corporate Responsibility program in 2017, we have built upon our sustainability objectives, including tracking metrics related to our energy and water consumption and greenhouse gas emissions. We have also established science-aligned reduction targets for emissions and water usage.
Corporate Responsibility Matters Since establishing our Corporate Responsibility program in 2017, we have built upon our sustainability objectives, including tracking metrics related to our energy and water consumption and greenhouse gas emissions. We have also established science-aligned reduction targets for emissions and water usage.
Our Financing Strategy We rely on cash generated through operations, working capital, borrowings under our senior revolving and term loan facility (the "2023 Senior Credit Facility"), term debt, repayment of notes receivable, proceeds from the issuance of convertible securities, proceeds from the issuance of common and preferred securities, the strategic sale of lodging properties, contributions from our joint venture partners, and the release of restricted cash upon satisfaction of the usage requirements to finance our business.
Our Financing Strategy We rely on cash from operations, working capital, borrowings under our senior revolving and term loan facility (the "2023 Senior Credit Facility"), term debt, repayment of notes receivable, proceeds from the issuance of convertible securities, proceeds from the issuance of common and preferred securities, the strategic sale of lodging properties, contributions from our joint venture partners, and the release of restricted cash upon satisfaction of the usage requirements to finance our business.
At December 31, 2023, we owned, directly and indirectly, approximately 87% of the Operating Partnership’s issued and outstanding common units of limited partnership interest (“Common Units”), and all of the Operating Partnership’s issued and outstanding Series E and Series F preferred units of limited partnership interests.
At December 31, 2024, we owned, directly and indirectly, approximately 87% of the Operating Partnership’s issued and outstanding common units of limited partnership interest (“Common Units”), and all of the Operating Partnership’s issued and outstanding Series E and Series F preferred units of limited partnership interests.
As of December 31, 2023, 86% of our guestrooms were located in the top 50 metropolitan statistical areas (“MSAs”), 90% were located within the top 100 MSAs, and over 99% of our guestrooms operated under premium franchise brands owned by Marriott® International, Inc. (“Marriott”), Hilton® Worldwide (“Hilton”), Hyatt® Hotels Corporation (“Hyatt”), and InterContinental® Hotels Group (“IHG”).
As of December 31, 2024, 86% of our guestrooms were located in the top 50 metropolitan statistical areas (“MSAs”), 91% were located within the top 100 MSAs, and over 99% of our guestrooms operated under premium franchise brands owned by Marriott ® International, Inc. (“Marriott”), Hilton ® Worldwide (“Hilton”), Hyatt ® Hotels Corporation (“Hyatt”), and InterContinental ® Hotels Group (“IHG”).
The obligation to make readily achievable accommodations is ongoing, and we will continue to assess our properties and to make alterations as appropriate in this respect. Environmental, Health and Safety Matters Our lodging properties and undeveloped land parcels are subject to various federal, state and local environmental laws that impose liability for contamination.
The obligation to make readily achievable accommodations is ongoing, and we will continue to assess our properties and to make alterations as appropriate in this respect. Environmental, Health and Safety Matters Our properties are subject to various federal, state and local environmental laws that impose liability for contamination.
Our pro rata debt taking into consideration only our portion of our joint venture debt was $1.1 billion at December 31, 2023.
Our pro rata debt, taking into consideration only our portion of our joint venture debt, was $1.1 billion at December 31, 2024.
To the extent that we sell lodging properties, we may redeploy the capital into acquisition and capital investment opportunities that we believe have the potential to generate better risk-adjusted returns, or we may repay outstanding indebtedness.
To the extent that we sell lodging properties, we may redeploy the capital into acquisition and capital investment opportunities that we believe have the potential to generate better risk-adjusted returns, repay outstanding indebtedness, or for general corporate purposes.
We have separate TRSs that lease the lodging properties owned in our joint ventures. We will lease newly acquired lodging properties to our existing TRSs or additional TRSs in the future. Our TRS Lessees pay rent to us that will qualify as “rents from real property,” provided that the TRS Lessees engage “eligible independent contractors” to manage our lodging properties.
We will lease newly acquired lodging properties to our existing TRSs or additional TRSs in the future. Our TRS Lessees pay rent to us that will qualify as “rents from real property,” provided that the TRS Lessees engage “eligible independent contractors” to manage our lodging properties.
Our debt includes, and may include in the future, debt secured by stock pledges, mortgage debt secured by lodging properties and unsecured debt. As of December 31, 2023, we had $1.4 billion in outstanding indebtedness, including $675.9 million related to our joint ventures.
Our consolidated debt includes, and may include in the future, debt secured by stock pledges, mortgage debt secured by lodging properties and unsecured debt. As of December 31, 2024, we had $1.4 billion in outstanding indebtedness, including $710.5 million related to our joint ventures.
In addition, we have a formal annual goal setting and performance review process for our employees. 9 We believe that equal employment opportunity is a fundamental principle and do not tolerate discrimination against any person on the basis of race, color, religious creed, sex, age, gender, gender identity, national origin, ancestry, present or past history of mental disability, learning disability, physical disability, marital status, pregnancy, genetic information, sexual orientation or any other protected characteristic as established by law, in recruiting, hiring, compensation, benefits, termination or any other terms or conditions of employment.
We believe that equal employment opportunity is a fundamental principle and do not tolerate discrimination against any person on the basis of race, color, religious creed, sex, age, gender, gender identity, national origin, ancestry, present or past history of mental disability, learning disability, physical disability, marital status, pregnancy, genetic information, sexual orientation or any other protected characteristic as established by law, in recruiting, hiring, compensation, benefits, termination or any other terms or conditions of employment.
To attract and retain top talent, we have designed our compensation and benefits programs to provide a balanced and effective reward structure, including: • Subsidized medical, dental and vision insurance; • Life and disability insurance; • Stock grant program; • 401(k) savings and retirement plan with Company Safe Harbor contribution; • Paid family leave; and • Employee education programs.
To attract and retain top talent, we have designed our compensation and benefits programs to provide a balanced and effective reward structure, including: • Subsidized medical, dental and vision insurance; • Life and disability insurance; • Stock grant program; • 401(k) savings and retirement plan with Company Safe Harbor contribution; • Paid family leave; and • Employee education programs. 8 We believe that our compensation and employee benefits are competitive and allow us to attract and retain skilled employees throughout our Company.
Human Capital Resources As of February 9, 2024, we had 78 full-time corporate employees. None of our corporate employees is represented by a labor union or covered by a collective bargaining agreement.
Human Capital Resources As of February 13, 2025, we had 85 full-time corporate employees. None of our corporate employees is represented by a labor union or covered by a collective bargaining agreement.
We believe these investments produce attractive returns, and we intend to continue to invest capital to upgrade our lodging properties with strategic renovations, property improvement plans, and return on discretionary investments. 4 External Growth Through Acquisitions.
We believe these investments produce attractive returns, and we intend to continue to invest capital to upgrade our lodging properties with strategic repositionings, renovations, property improvement plans, and discretionary investments which we expect to generate compelling returns. 4 External Growth Through Acquisitions.
At December 31, 2023, our portfolio consisted of 100 lodging properties with a total of 14,912 guestrooms located in 24 states. We own our properties fee simple, except for six hotel properties which are subject to ground leases. As of December 31, 2023, we own 100% of the outstanding equity interests in 56 of our lodging properties.
At December 31, 2024, our portfolio consisted of 97 lodging properties with a total of 14,553 guestrooms located in 25 states. We own our properties fee simple, except for six hotel properties which are subject to ground leases. As of December 31, 2024, we own 100% of the outstanding equity interests in 53 of our lodging properties.
Additionally, we have expanded charitable engagement with our community through the Summit Foundation, our 501(c)(3) nonprofit organization, and have broadened our social programs to enhance connectivity among our employees, business partners, and other stakeholders to better enable us to champion an environment of diversity and inclusion.
Additionally, we have expanded charitable engagement with our community through the Summit Foundation, our 501(c)(3) nonprofit organization, and have broadened our social programs to enhance connectivity among our employees, business partners, and other stakeholders to better enable us to have a positive effect on our community.
This competition may increase the bargaining power of property owners seeking to sell, reduce the number of suitable investment opportunities available to us, and increase the cost of acquiring targeted lodging properties. The lodging industry is highly competitive.
Some of these entities have substantially greater financial and operational resources than we have. This competition may increase the bargaining power of property owners seeking to sell, reduce the number of suitable investment opportunities available to us, and increase the cost of acquiring targeted lodging properties. The lodging industry is highly competitive.
Our telephone number is (512) 538-2300. Our website is www.shpreit.com . The information contained on, or accessible through, our website is not incorporated by reference into this report and should not be considered a part of this report.
Our telephone number is (512) 538-2300. Our website is www.shpreit.com . The information contained on, or accessible through, our website is not incorporated by reference into this report and should not be considered a part of this report. Business Strategy Our portfolio consists of lodging properties in desirable locations with efficient operating models.
We believe that we have been organized and have operated in conformity with the requirements for qualification as a REIT under the IRC and that our current and intended manner of operation will enable us to continue to meet the requirements for qualification and taxation as a REIT for federal income tax purposes. 8 For the income from our lodging operations to constitute “rents from real property” for purposes of the gross income tests required for REIT qualification, we cannot directly operate any of our lodging properties.
We believe that we have been organized and have operated in conformity with the requirements for qualification as a REIT under the IRC and that our current and intended manner of operation will enable us to continue to meet the requirements for qualification and taxation as a REIT for federal income tax purposes.
When purchasing lodging properties, the Operating Partnership may issue Common Units or Preferred Units as full or partial consideration to sellers who may be interested in taking advantage of the opportunity to defer taxable gains on the sale of a property or participate in the potential appreciation in the value of our common stock.
When purchasing lodging properties, the Operating Partnership may issue Common Units or Preferred Units as full or partial consideration to sellers who may be interested in taking advantage of the opportunity to defer taxable gains on the sale of a property or participate in the potential appreciation in the value of our common stock. 5 Competition We face competition for investments in lodging properties from institutional pension funds, private equity investors, REITs, lodging companies and others who are engaged in acquisitions of and investments in lodging properties.
Lodging properties with efficient operating models generally require less capital to acquire, build, and maintain on an absolute and a per-key basis, than lodging properties in the full-service segment of the industry. As a result, we can diversify our investment capital into ownership of a larger number of lodging properties than we could in the full-service segment.
Our lodging properties are characterized by efficient operating models that generally require less capital to acquire, build, and maintain on an absolute and a per-key basis, than lodging properties in the full-service segment of the industry.
Capitalize on Investments in Our Lodging Properties . We believe in the benefits of strategically investing capital in our properties to ensure they are in good physical condition and facilitate market leading financial performance.
As a result, we can diversify our investment capital into ownership of a larger number of lodging properties than we could in the full-service segment. Capitalize on Investments in Our Lodging Properties . We believe in the benefits of strategically investing capital in our properties to ensure they are in good physical condition and facilitate market leading financial performance.
Our target brands deliver consistently high-quality guest accommodations with value-oriented pricing that we believe appeals to a wide range of customers, including business transient, group, leisure and government travelers.
Through our brand partnerships and efficient operating model, we are better able to predict revenues and generate cash flows with less volatility. • Broad Customer Base . Our target brands deliver consistently high-quality guest accommodations with value-oriented pricing that we believe appeals to a wide range of customers, including business transient, group, leisure and government travelers.
NewcrestImage Holdings, LLC owns all of the issued and outstanding 5.25% Series Z Cumulative Perpetual Preferred Units (Liquidation preference $25 per unit) of the Operating Partnership ("Series Z Preferred Units"), which was issued as part of the NCI Transaction (as defined under Part 1 - Item 1. " Our Financing Strategy" below).
NewcrestImage Holdings, LLC owns all of the issued and outstanding 5.25% Series Z Cumulative Perpetual Preferred Units of the Operating Partnership ("Series Z Preferred Units"), which was issued as part of the NCI Transaction (as defined under "Part II - Item 8. – Financial Statements and Supplementary Data – Note 6 - Debt ").
We may, however, generate "rents from real property" through leasing our lodging properties to our TRSs, subject to certain conditions. A TRS is a fully taxable corporate subsidiary of a REIT that jointly elects with the REIT to be treated as a TRS of that REIT. Accordingly, all of our lodging properties are leased to our TRS Lessees.
A TRS is a fully taxable corporate subsidiary of a REIT that jointly elects with the REIT to be treated as a TRS of that REIT. Accordingly, all of our lodging properties are leased to our TRS Lessees. We have separate TRSs that lease the lodging properties owned in our joint ventures.
Some of our properties may have contained historical uses which involved the use or storage of hazardous chemicals and petroleum products (for example, storage tanks, gas stations and dry-cleaning operations) which if released, could have affected our properties.
Furthermore, persons who sent waste to a waste disposal facility, such as a landfill or an incinerator, may be liable for costs associated with cleanup of that facility. 6 Some of our properties may have contained historical uses which involved the use or storage of hazardous chemicals and petroleum products (for example, storage tanks, gas stations and dry-cleaning operations) which if released, could have affected our properties.
We believe that our focus on this segment provides us the opportunity to achieve strong, risk-adjusted returns across multiple lodging cycles for several reasons, including: • RevPAR Growth .
We believe that our focus on this segment provides us the opportunity to achieve strong, risk-adjusted returns across multiple lodging cycles for several reasons, including: • RevPAR Growth . We believe that our lodging properties are positioned for long-term demand growth supported by the characteristics of our portfolio and its ability to appeal to evolving guest preferences. • Labor Model.
Over the past few years, we have expanded the number of our lodging properties with smart building technologies, electric vehicle charging stations, and green certifications. We reduced our greenhouse gas emissions by 15% from our 2019 baseline year by reducing our energy consumption by 7% and increasing the percentage of our electricity sourced from renewable energy by 6%.
Over the past few years, we have expanded the number of our lodging properties with smart building technologies, electric vehicle charging stations, and green certifications.
We have established social programs with the goal of promoting a culture of unity and collaboration among our various departments through career and personal development opportunities designed to inspire all of those involved. Our career and personal development focus on four main principles: (1) communication and teamwork; (2) networking and mentorship; (3) leadership development; and (4) work-life balance.
We frequently benchmark our compensation and benefits package against our industry peers, local market, and for similar job functions. We have established social programs with the goal of promoting a culture of unity and collaboration among our various departments through career and personal development opportunities designed to inspire all of those involved.
For more information on these and our other sustainability practices, including environmental and social metrics and results, please see our current sustainability report available on our website at https://www.shpreit.com/responsibility/about.
For more information on these and our other sustainability practices, including environmental and social metrics and results, please see our current sustainability report available on our website at https://www.shpreit.com/responsibility/about. 7 Tax Status REIT Election We have elected to be taxed as a REIT under Sections 856 through 859 of the IRC, commencing with our short taxable year ended December 31, 2011.
See "Part II - Item 8. - Financial Statements and Supplementary Data - Note 6 – Debt ” for further information. Our long-term leverage approach is to maintain conservative debt levels with high coverage ratios to allow us the flexibility to withstand various economic cycles and to position us for growth when opportunities arise that meet our investment criteria.
We may also issue Common Units or Preferred Units of the Operating Partnership in connection with acquisitions. Our long-term approach is to maintain conservative debt levels with high coverage ratios and to ensure adequate liquidity to withstand various economic cycles and position the Company for growth when opportunities arise that meet our investment criteria.
We are committed to maintaining a work culture that treats all employees fairly and with respect, promotes inclusivity and provides equal opportunities for advancement based on merit. Our workforce diversity has increased during the year ended December 31, 2023. Of the 78 full-time corporate employees employed by us at February 9, 2024, women constituted approximately 45% of our workforce.
We are committed to maintaining a work culture that treats all employees fairly and with respect, promotes inclusivity and provides equal opportunities for advancement based on merit. Available Information Our Internet website is located at www.shpreit.com.
Our lodging properties are generally operated with fewer employees than full-service lodging properties, which enables our assets to generate higher operating margins and cash flows with less volatility. • Broad Customer Base .
Our lodging properties are characterized by efficient operating models and are typically operated with approximately 30 full-time equivalent employees for our brand franchised hotels. These staffing levels are significantly below full-service lodging properties, which enables our assets to generate higher operating margins and cash flow with less volatility. • Stable Cash Flow .
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Effects of COVID-19 Pandemic Beginning in March 2020, we experienced the adverse effects of the COVID-19 pandemic (the "Pandemic"), which had a significant negative effect on the U.S. and global economies, including a rapid and sharp decline in all forms of travel, both domestic and international, and a significant decline in lodging demand.
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We operate our lodging properties primarily under franchise agreements with Marriott, Hilton, Hyatt and IHG. These franchisors have loyalty programs, marketing and branding programs, and provide global central reservation systems, which enable us to access a relatively stable base of demand.
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As such, we experienced a substantial decline in our revenues, profitability and cash flows from operations from the onset of the Pandemic and into the first quarter of 2022. We began to experience a recovery in our business in the first quarter of 2022, which accelerated in the second quarter of 2022 and thereafter.
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We maintain strong relationships with the lending community and access the bank market as well as private and public capital markets to fund our business. Finally, we maintain a staggered debt maturity schedule to manage liquidity and navigate volatility in the capital markets.
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As a result, we experienced significant improvement in lodging demand during the years ended December 31, 2023 and 2022 led by strong leisure travel and more recently, growth in business transient and group travel. Business Strategy Our portfolio consists of lodging properties in desirable locations with efficient operating models.
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The Phase I environmental site assessments were completed at various times and material environmental conditions, liabilities or compliance concerns may have arisen after the review was completed or may arise in the future; and future laws, ordinances or regulations may impose material additional environmental liability.
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We believe that our lodging properties are positioned for long-term demand growth supported by the characteristics of our portfolio and its ability to appeal to evolving guests preferences. • Stable Cash Flow .
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We reduced our Scope 1 and 2 greenhouse gas emissions by 26% from our 2019 baseline year by reducing our energy consumption by approximately 6% and increasing the percentage of our electricity sourced from renewable energy by 12%.
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We may also issue Common Units or Preferred Units of the Operating Partnership in connection with acquisitions. The 2023 Senior Credit Facility is comprised of a $400.0 million revolver (the "$400 Million Revolver") and a $200.0 million term loan facility (the $200 Million Term Loan").
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For the income from our lodging operations to constitute “rents from real property” for purposes of the gross income tests required for REIT qualification, we cannot directly operate any of our lodging properties. We may, however, generate "rents from real property" through leasing our lodging properties to our TRSs, subject to certain conditions.
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We entered into the 2023 Senior Credit Facility during the year ended December 31, 2023, which amended and restated in its entirety our prior senior credit facility and included fully extended maturities for the $400 Million Revolver and $200 Million Term Loan to June 2028.
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Our career and personal development focus on four main principles: (1) communication and teamwork; (2) networking and mentorship; (3) leadership development; and (4) work-life balance. In addition, we have a formal annual goal setting and performance review process for our employees.
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See "Part II - Item 8. - Financial Statements and Supplementary Data - Note 6 – Debt ” for further information. In February 2024, the Company successfully completed a new $200 million senior unsecured term loan financing (the “2024 Term Loan”).
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The 2024 Term Loan provides for a fully extended maturity date of February 2029 and interest rate pricing ranging from 135 basis points to 235 basis points over the applicable adjusted term Secured Overnight Financing Rate (“SOFR”).
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Proceeds from the 2024 Term Loan financing along with advances on our $400 Million Revolver were used to repay in full the Company’s $225 million 2018 Term Loan (as defined under "Part II - Item 8. - Financial Statements and Supplementary Data - Note 6 – Debt ”) that was scheduled to mature in February 2025.
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As a result of the 2024 Term Loan financing, the Company has significantly reduced its debt maturities until 2026 and has an average length to maturity of approximately 3.6 years. Other terms of the agreement are similar to the Company’s previous 2018 Term Loan.
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See "Part II - Item 8. - Financial Statements and Supplementary Data - Note 6 – Debt ” for further information. 5 Our GIC Joint Venture also operates with borrowings under a $200.0 million credit facility (the "GIC Joint Venture Credit Facility").
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The GIC Joint Venture Credit Facility is comprised of a $125.0 million revolving credit facility (the “$125 Million Revolver”) and a $75.0 million term loan (the “$75 Million Term Loan”). In September 2023, we recast the GIC Joint Venture Facility to extend the maturities of the $125 Million Revolver and the $75 Million Term Loan to September 2028.
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See "Part II - Item 8. - Financial Statements and Supplementary Data - Note 6 – Debt ” for further information.
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In January and March 2022, the Operating Partnership and the GIC Joint Venture closed on a transaction with NewcrestImage Holdings, LLC, a Delaware limited liability company, and NewcrestImage Holdings II, LLC, a Delaware limited liability company (together, “NewcrestImage”), to purchase from NewcrestImage a portfolio of 27 lodging properties, containing an aggregate of 3,709 guestrooms, and two parking structures, containing 1,002 spaces and various financial incentives for an aggregate purchase price of $822.0 million (the "NCI Transaction").
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In connection with the NCI Transaction, on January 13, 2022, our GIC Joint Venture entered into a $410.0 million senior secured term loan facility (the “GIC Joint Venture Term Loan”) secured by the 27 lodging properties and two parking garages acquired in the NCI Transaction and assumed a Property Assessed Clean Energy (" PACE") loan totaling $6.5 million.
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The GIC Joint Venture Term Loan has an accordion feature which will permit an increase in the total commitments by up to $190.0 million, for aggregate potential borrowings of up to $600.0 million.
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The GIC Joint Venture Term Loan has an initial maturity date of January 2026 and can be extended for a single 12-month period at the GIC Joint Venture's option, subject to certain contains. As such, the GIC Joint Venture Term Loan has a fully extended maturity date of January 2027.
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Competition We face competition for investments in lodging properties from institutional pension funds, private equity investors, REITs, lodging companies and others who are engaged in acquisitions of and investments in lodging properties. Some of these entities have substantially greater financial and operational resources than we have.
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Furthermore, persons who sent waste to a waste disposal facility, such as a landfill or an incinerator, may be liable for costs associated with cleanup of that facility.
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Environmental, Social and Governance ("ESG") Matters Our ongoing commitment to our environment, our communities and our stakeholders is an important part of our core responsibility to be more sustainable, inclusive and equitable.
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Forward-looking and other statements in this report or other locations, such as our corporate website, is informed by various ESG standards and frameworks (including standards for the measurement of underlying data) and the interests of various stakeholders.
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Such information may not and should not be interpreted as necessarily being “material” under the federal securities laws for reporting purposes with the Securities and Exchange Commission ("SEC"), even if we use the word “material” or “materiality” in such documents.
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ESG information is also often reliant on third-party information or methodologies that are subject to evolving expectations and best practices, and our approach to and discussion of these matters may continue to evolve as well.
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For example, our disclosures may change due to revisions in framework requirements, availability of information, changes in our business or applicable governmental policies, or other factors, some of which may be beyond our control.
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Finally, website and document references in this report are provided for convenience; absent express language to the contrary, such materials are not incorporated by reference to this report. Tax Status REIT Election We have elected to be taxed as a REIT under Sections 856 through 859 of the IRC, commencing with our short taxable year ended December 31, 2011.
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We believe that our compensation and employee benefits are competitive and allow us to attract and retain skilled employees throughout our Company. We frequently benchmark our compensation and benefits package against those in both our industry and in similar disciplines.
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Individuals who identify as traditionally underrepresented races or ethnicities constituted approximately 22% of our workforce. We intend to continue using a combination of targeted recruiting, talent development and internal promotion strategies to expand the diversity of our employee base across all roles and functions. Available Information Our Internet website is located at www.shpreit.com.
Item 1A. Risk Factors
Risk Factors — what could go wrong, per management
55 edited+137 added−7 removed166 unchanged
Item 1A. Risk Factors
Risk Factors — what could go wrong, per management
55 edited+137 added−7 removed166 unchanged
2023 filing
2024 filing
Biggest changeWe also rely on distributions from our Operating Partnership to meet any of our obligations, including tax liabilities on taxable income allocated to us from our Operating Partnership (which might make distributions to us that do not equal the tax on such allocated taxable income). 27 In addition, because we are a holding company, stockholders’ claims will be structurally subordinated to all existing and future liabilities and obligations (whether or not for borrowed money) of our Operating Partnership and its subsidiaries, including the Convertible Notes (defined below under "Part II. -
Biggest changeIn addition, because we are a holding company, stockholders’ claims will be structurally subordinated to all existing and future liabilities and obligations (whether or not for borrowed money) of our Operating Partnership and its subsidiaries, including the Convertible Notes (as defined under "Part II - Item 8. – Financial Statements and Supplementary Data – Note 6 - Debt ").
By contrast, our lodging properties are subject to various operating risks common to the lodging industry, many of which are beyond our control, including the following: • relatively short-duration occupancies; • dependence on business and commercial travelers and tourism; • over-building of lodging properties in our markets, which could adversely affect occupancy and revenue at the lodging properties we acquire; • increases in energy costs and other expenses affecting travel, which may affect travel patterns and reduce the number of business and commercial travelers and tourists; • increases in operating costs, including increased real estate and personal property taxes and insurance costs due to inflation and other factors that may not be offset by increased guestroom rates; • potential increases in labor costs at our lodging properties, including as a result of unionization of the labor force, and increasing health care insurance expense; • changes in governmental laws and regulations, fiscal policies and zoning ordinances and the related costs of compliance with laws and regulations, fiscal policies and ordinances; • adverse effects of international, national, regional and local economic and market conditions; and • unforeseen events beyond our control, such as instability in the national, European or global economy, terrorist attacks, travel-related health concerns including pandemics and epidemics, travel-related environmental concerns including water contamination and air pollution, political instability, regional hostilities, increases in fuel prices, imposition of taxes or surcharges by regulatory authorities and travel-related accidents and unusual weather patterns, including natural disasters such as hurricanes.
Our lodging properties are subject to various operating risks common to the lodging industry, many of which are beyond our control, including the following: • relatively short-duration occupancies; • dependence on business and commercial travelers and tourism; • over-building of lodging properties in our markets, which could adversely affect occupancy and revenue at the lodging properties we acquire; • increases in energy costs and other expenses affecting travel, which may affect travel patterns and reduce the number of business and commercial travelers and tourists; • increases in operating costs, including increased real estate and personal property taxes and insurance costs due to inflation and other factors that may not be offset by increased guestroom rates; • potential increases in labor costs at our lodging properties, including as a result of unionization of the labor force, and increasing health care insurance expense; • changes in governmental laws and regulations, fiscal policies and zoning ordinances and the related costs of compliance with laws and regulations, fiscal policies and ordinances; • adverse effects of international, national, regional and local economic and market conditions; and • unforeseen events beyond our control, such as instability in the national, European or global economy, terrorist attacks, travel-related health concerns including pandemics and epidemics, travel-related environmental concerns including water contamination and air pollution, political instability, regional hostilities, increases in fuel prices, imposition of taxes or surcharges by regulatory authorities and travel-related accidents and unusual weather patterns, including natural disasters such as hurricanes.
Economic weakness could adversely affect our consolidated financial position, results of operations, and cash flows or the market price of our stock. We experience a high level of competition from other hotels and alternative accommodations in the markets in which we operate. The lodging industry is highly competitive.
Economic weakness could adversely affect our consolidated financial position, results of operations, and cash flows or the market price of our stock. 20 We experience a high level of competition from other hotels and alternative accommodations in the markets in which we operate. The lodging industry is highly competitive.
If any of the risks discussed in this report were to occur, our business, prospects, financial condition, results of operation and our ability to service our debt and make distributions to our stockholders could be materially and adversely affected and the market price per share of our stock could decline significantly.
If any of the risks discussed in this report were to occur, our business, prospects, consolidated financial condition, consolidated results of operation and our ability to service our debt and make distributions to our stockholders could be materially and adversely affected and the market price per share of our stock could decline significantly.
These conditions could adversely affect our consolidated financial position, results of operations, and cash flows or the market price of our stock. We have significant ongoing needs to make capital expenditures at our lodging properties, which require us to devote funds to these purposes.
These conditions could adversely affect our consolidated financial position, results of operations, and cash flows or the market price of our stock. 21 We have significant ongoing needs to make capital expenditures at our lodging properties, which require us to devote funds to these purposes.
If we cease to be a REIT, we would become subject to federal income tax on our taxable income and would no longer be required to distribute most of our taxable income to our stockholders, which may have adverse consequences on the total return to our stockholders. We are a holding company with no direct operations.
If we cease to be a REIT, we would become subject to federal income tax on our taxable income and would no longer be required to distribute most of our taxable income to our stockholders, which may have adverse consequences on the total return to our stockholders. 26 We are a holding company with no direct operations.
These conditions could adversely affect our consolidated financial position, results of operations, and cash flows or the market price of our stock. 22 Development of lodging properties is subject to timing, budgeting and other risks.
These conditions could adversely affect our consolidated financial position, results of operations, and cash flows or the market price of our stock. Development of lodging properties is subject to timing, budgeting and other risks.
If the workers at our lodging properties unionize in the future or if there is unionization activity in a market in which we own a lodging property, we could incur a significant increase in administrative, labor and legal expenses, which could adversely affect our consolidated financial position, results of operations, and cash flows or the market price of our stock. 12 We may be unable to complete acquisitions that would grow our business.
If the workers at our lodging properties unionize in the future or if there is unionization activity in a market in which we own a lodging property, we could incur a significant increase in administrative, labor and legal expenses, which could adversely affect our consolidated financial position, results of operations, and cash flows or the market price of our stock. 11 We may be unable to complete acquisitions that would grow our business.
Because our lodging properties are concentrated with a limited number of franchise brands, a loss of all of the licenses for a particular franchise could adversely affect our consolidated financial position, results of operations, and cash flows or the market price of our stock. 15 Negative publicity related to one of the franchise brands or the general decline of a brand also may adversely affect the underlying value of our lodging properties or result in a reduction in business.
Because our lodging properties are concentrated with a limited number of franchise brands, a loss of all of the licenses for a particular franchise could adversely affect our consolidated financial position, results of operations, and cash flows or the market price of our stock. 14 Negative publicity related to one of the franchise brands or the general decline of a brand also may adversely affect the underlying value of our lodging properties or result in a reduction in business.
These conditions could adversely affect our consolidated financial position, results of operations, and cash flows or the market price of our stock. 17 An increase in interest rates would increase our interest costs on our variable rate debt and continued high rates of interest on our variable rate debt could have broader effects on the cost of capital for real estate companies and real estate asset values.
These conditions could adversely affect our consolidated financial position, results of operations, and cash flows or the market price of our stock. 16 An increase in interest rates would increase our interest costs on our variable rate debt and continued high rates of interest on our variable rate debt could have broader effects on the cost of capital for real estate companies and real estate asset values.
We may assume existing liabilities in connection with the acquisition of lodging properties, some of which may be unknown or unquantifiable on the acquisition date.
We may assume liabilities in connection with the acquisition of lodging properties, including unknown liabilities. We may assume existing liabilities in connection with the acquisition of lodging properties, some of which may be unknown or unquantifiable on the acquisition date.
The loss of services from any of the members of our management team, and our inability to find suitable replacements on a timely basis, could adversely affect our consolidated financial position, results of operations, and cash flows or the market price of our stock. 18 We could incur uninsured and underinsured losses.
The loss of services from any of the members of our management team, and our inability to find suitable replacements on a timely basis, could adversely affect our consolidated financial position, results of operations, and cash flows or the market price of our stock. 17 We could incur uninsured and underinsured losses.
These conditions could adversely affect our consolidated financial position, results of operations, and cash flows or the market price of our stock. 14 The management of a large number of lodging properties in our portfolio is currently concentrated with one property management company.
These conditions could adversely affect our consolidated financial position, results of operations, and cash flows or the market price of our stock. 13 The management of a large number of lodging properties in our portfolio is currently concentrated with one property management company.
Summary of Risk Factors Risks Related to Our Business • Risks related to achieving revenue and net income growth • Risks related to financing, including the risk of leverage and the corresponding risk of default on our existing indebtedness and potential inability to refinance or extend the maturities of our existing indebtedness; • Risks related to acquisitions • Risks of taxable gains as a result of lodging property dispositions • Risks related to our third-party property management companies • Risks related to lodging property management and franchise agreements • Risks related to increased interest rates or continued high rates of interest, and our ability to hedge our interest rate exposure • Risks related to retaining key personnel • Risks related to organized labor • Risks related to the effect on our business or guest confidence from a data breach or significant disruption of property operator information technology networks as a result of cyber-attacks that are greater than insurance coverages or indemnities from service providers • Risks related to uninsured and underinsured losses • Risks related to the management of our joint ventures • Risks related to inflation • Risks related to credit financing that we may provide to borrowers • Risks related to global, national, regional and local economic and geopolitical conditions and events, including wars or potential hostilities, such as terrorist attacks that may affect travel Risks Related to the Lodging Industry • Risks related to infectious disease outbreaks or pandemics • Risks related to adverse changes in economic conditions • Risks related to competition from other lodging properties and alternative accommodations • Risks inherent to the ownership of lodging properties and the markets in which we operate • Risks related to lodging property development and other capital expenditures • Risks related to changes in consumer trends and preferences 10 Risks Related to the Real Estate Industry and Real Estate-Related Investments • Risks related to the illiquidity of real estate investments • Risks related to compliance with the laws, regulations and covenants that apply to our lodging properties • Risks related to right-of-use assets on which certain of our lodging properties are located • Risks related to adverse changes in income and property tax rates or amendments to tax regimes that increase our state and local tax liabilities Risks Related to Our Organization and Structure • Risks related to our fiduciary duties as the general partner of our Operating Partnership • Risks related to the provisions of our charter • Risks related to the provisions of Maryland law • Risks related to the limited rights of our stockholders • Risks related to actions taken by our board of directors • Risks related to being a holding company with no direct operations • Risks related to maintaining an effective system of internal controls Risks Related to Ownership of Our Securities • Risks related to the continued listing of our securities on a nationally-recognized exchange • Risks related to expected distributions • Risks related to stock price volatility • Risks related to the issuance of debt or equity securities Risks Related to Our Status as a REIT • Risks related to compliance with REIT regulations • Risks related to our TRS structure, including increased tax liabilities and operating costs • Risks that transactions with our TRSs are not conducted on arm's-length terms • Risks that the management companies of our lodging properties may not qualify as “eligible independent contractors,” or our lodging properties may not be considered “qualified lodging facilities” • Risks that the 100% prohibited transactions tax may limit our ability to dispose of our properties • Risks related to adverse legislative or regulatory tax changes • Risks related to our REIT distribution requirements • Risks that our Operating Partnership could be treated as a publicly traded partnership taxable as a corporation for federal income tax purposes • Risks that stockholders may be restricted from acquiring or transferring certain amounts of our stock • Risks that the IRS could determine that certain payments we have received in the nature of liquidated damages may not be ignored for purposes of the gross income tests applicable to REITs Risks Related to Environmental, Social and Governance Factors • Risks related to environmental uncertainties and natural disasters • Risks related to our ability to continue to manage our ESG program to achieve expected social, environment and governance objectives and goals 11 The following risk factors address the material risks concerning our business.
Summary of Risk Factors Risks Related to Our Business • Risks related to achieving revenue and net income growth • Risks related to financing, including the risk of leverage and the corresponding risk of default on our existing indebtedness and potential inability to refinance or extend the maturities of our existing indebtedness; • Risks related to acquisitions • Risks of taxable gains as a result of lodging property dispositions • Risks related to our third-party property management companies • Risks related to lodging property management and franchise agreements • Risks related to increased interest rates or continued high rates of interest, and our ability to hedge our interest rate exposure • Risks related to retaining key personnel • Risks related to organized labor • Risks related to the effect on our business or guest confidence from a data breach or significant disruption of property operator information technology networks as a result of cyber-attacks that are greater than insurance coverages or indemnities from service providers • Risks related to uninsured and underinsured losses • Risks related to the management of our joint ventures • Risks related to inflation • Risks related to credit financing that we may provide to borrowers • Risks related to global, national, regional and local economic and geopolitical conditions and events, including wars or potential hostilities, such as terrorist attacks that may affect travel 9 Risks Related to the Lodging Industry • Risks related to infectious disease outbreaks or pandemics • Risks related to adverse changes in economic conditions • Risks related to competition from other lodging properties and alternative accommodations • Risks inherent to the ownership of lodging properties and the markets in which we operate • Risks related to lodging property development and other capital expenditures • Risks related to changes in consumer trends and preferences Risks Related to the Real Estate Industry and Real Estate-Related Investments • Risks related to the illiquidity of real estate investments • Risks related to compliance with the laws, regulations and covenants that apply to our lodging properties • Risks related to right-of-use assets on which certain of our lodging properties are located • Risks related to adverse changes in income and property tax rates or amendments to tax regimes that increase our state and local tax liabilities Risks Related to Our Organization and Structure • Risks related to our fiduciary duties as the general partner of our Operating Partnership • Risks related to the provisions of our charter • Risks related to the provisions of Maryland law • Risks related to the limited rights of our stockholders • Risks related to actions taken by our board of directors • Risks related to being a holding company with no direct operations • Risks related to maintaining an effective system of internal controls Risks Related to Ownership of Our Securities • Risks related to the continued listing of our securities on a nationally-recognized exchange • Risks related to expected distributions • Risks related to stock price volatility • Risks related to the issuance of debt or equity securities Risks Related to Our Status as a REIT • Risks related to compliance with REIT requirements • Risks related to our TRS structure, including increased tax liabilities and operating costs • Risks that transactions with our TRSs are not conducted on arm's-length terms • Risks that the management companies of our lodging properties may not qualify as “eligible independent contractors,” or our lodging properties may not be considered “qualified lodging facilities” • Risks that the 100% prohibited transactions tax may limit our ability to dispose of our properties • Risks related to adverse legislative or regulatory tax changes • Risks related to our REIT distribution requirements • Risks that our Operating Partnership could be treated as a publicly traded partnership taxable as a corporation for federal income tax purposes • Risks that stockholders may be restricted from acquiring or transferring certain amounts of our stock • Risks that the IRS could determine that certain payments we have received in the nature of liquidated damages may not be ignored for purposes of the gross income tests applicable to REITs Risks Related to Corporate Responsibility • Risks related to our corporate responsibility matters • Risks related to environmental uncertainties and natural disasters 10 The following risk factors address the material risks concerning our business.
Our lodging properties are primarily located in the top 50 MSAs and 90% are located within the top 100 MSAs. In certain regions, we have lodging properties that are concentrated geographically, which may increase business risks based on adverse market conditions.
Our lodging properties are primarily located in the top 50 MSAs and 91% are located within the top 100 MSAs. In certain regions, we have lodging properties that are concentrated geographically, which may increase business risks based on adverse market conditions.
As a result, any appreciated personal property that is transferred in connection with a Section 1031 Exchange of real property will cause gain to be recognized, and such gain is generally treated as non-qualifying income for the REIT 95% and 75% gross income tests. Any such non-qualifying income could have an adverse effect on our REIT status.
As a result, any appreciated personal property that is transferred in connection with 1031 Exchanges of real property will cause gain to be recognized, and such gain is generally treated as non-qualifying income for the REIT 95% and 75% gross income tests. Any such non-qualifying income could have an adverse effect on our REIT status.
We also compete with numerous owners and operators of vacation ownership resorts, as well as companies that offer alternative accommodations, such as Airbnb and similar organizations, which operate websites that market available furnished, privately-owned residential properties, including homes and condominiums, that can be rented on a nightly, weekly or monthly basis.
We also compete with owners and operators of vacation ownership resorts, as well as companies that offer alternative accommodations, such as Airbnb and similar organizations. These organizations operate websites that market available furnished, privately-owned residential properties, including homes and condominiums, that can be rented on a nightly, weekly or monthly basis.
During the year ended December 31, 2022 and thereafter, the U.S. economy has experienced a high rate of inflation, which has moderated during the year ended December 31, 2023 but still remains above historical levels.
During the year ended December 31, 2022 and thereafter, the U.S. economy has experienced a high rate of inflation, which has moderated during the year ended December 31, 2024 but still remains above historical levels.
As these Internet bookings increase, these intermediaries may be able to obtain higher commissions, reduced guestroom rates or other significant contract concessions from our property management companies.
As these Internet bookings increase, these OTA's may be able to obtain higher commissions, reduced guestroom rates or other significant contract concessions from our property management companies.
Also, as of December 31, 2023, six of our lodging properties are subject to third-party ground leases which generally require periodic increases in rent payments.
Also, as of December 31, 2024, six of our lodging properties are subject to third-party ground leases which generally require periodic increases in rent payments.
These agencies hope that consumers will eventually develop brand loyalties to their reservations system rather than to the brands under which our lodging properties are franchised.
These OTA's hope that consumers will eventually develop brand loyalties to their reservations system rather than to the brands under which our lodging properties are franchised.
We have entered into six interest rate swaps having an aggregate notional amount of $600.0 million at December 31, 2023, to hedge against interest rate increases on certain of our outstanding variable-rate indebtedness. In the future, we may manage our exposure to interest rate volatility by using hedging arrangements, such as interest rate swaps, caps, and collars.
We have entered into six interest rate swaps having an aggregate notional amount of $625.0 million at December 31, 2024, to hedge against interest rate increases on certain of our outstanding variable-rate indebtedness. In the future, we may manage our exposure to interest rate volatility by using hedging arrangements, such as interest rate swaps, caps, and collars.
A portion of our long-term debt existing as of December 31, 2023 is secured by mortgages on our lodging properties.
A portion of our long-term debt existing as of December 31, 2024 is secured by mortgages on our lodging properties.
Our ability to successfully integrate newly acquired lodging properties or achieve expected operating performance is subject to the following risks: • we may not possess the same level of familiarity with the dynamics and market conditions of any new markets that we may enter, which could result in us paying too much for lodging properties in new markets or not have the lodging properties achieve their maximum potential; • market conditions may result in lower-than-expected occupancy and guestroom rates; • we may acquire lodging properties without any recourse, or with only limited recourse, for liabilities, whether known or unknown, such as cleanup of environmental contamination, claims by tenants, vendors or other persons against the former owners of the lodging properties and claims for indemnification by general partners, directors, officers and others indemnified by the former owners of the lodging properties; • we may need to spend more than anticipated amounts to make necessary improvements or renovations to our newly acquired lodging properties; • we may be unable to quickly and efficiently integrate new acquisitions, particularly acquisitions of portfolios of lodging properties, into our existing operations; and • the inability of our acquired lodging properties to meet our operating performance expectations could adversely affect our consolidated financial position, results of operations, and cash flows or the market price of our stock. 13 We may assume liabilities in connection with the acquisition of lodging properties, including unknown liabilities.
Our ability to successfully integrate newly acquired lodging properties or achieve expected operating performance is subject to the following risks: • we may not possess the same level of familiarity with the dynamics and market conditions of any new markets that we may enter, which could result in overpaying for lodging properties in new markets or the lodging properties not achieving their maximum potential; • market conditions may result in lower-than-expected occupancy and guestroom rates; • we may acquire lodging properties without any recourse, or with only limited recourse, for liabilities, whether known or unknown, such as cleanup of environmental contamination, claims by tenants, vendors or other persons against the former owners of the lodging properties and claims for indemnification by general partners, directors, officers and others indemnified by the former owners of the lodging properties; • we may need to spend more than anticipated amounts to make necessary improvements or renovations to our newly acquired lodging properties; • we may be unable to quickly and efficiently integrate new acquisitions, particularly acquisitions of portfolios of lodging properties, into our existing operations; and 12 • the inability of our acquired lodging properties to meet our operating performance expectations could adversely affect our consolidated financial position, results of operations, and cash flows or the market price of our stock.
These conditions could have a material adverse effect on our business, consolidated financial position, results of operations and cash flows. 20 We may provide mezzanine financing to developers or seller financing in connection with the disposition of a lodging property which exposes us to credit financing risk in the case of a borrower default, resulting in a material adverse effect on our business, consolidated financial position, results of operations and cash flows.
We may provide mezzanine financing to developers or seller financing in connection with the disposition of a lodging property which exposes us to credit financing risk in the case of a borrower default, resulting in a material adverse effect on our business, consolidated financial position, results of operations and cash flows.
Moreover, some of these Internet travel intermediaries are attempting to offer lodging property guestrooms as a commodity, by increasing the importance of price and general indicators of quality (such as “three-star downtown property”) at the expense of brand identification.
Moreover, some of these OTA's are attempting to offer lodging property guestrooms as a commodity, by increasing the importance of price and general indicators of quality (such as “three-star downtown property”) at the expense of brand identification.
Our management agreements and franchise agreements generally contain restrictive covenants and other provisions that do not provide us with flexibility to sell, refinance or rebrand a lodging property without the consent of the manager or franchisor.
Certain management agreements and substantially all franchise agreements generally contain restrictive covenants and other provisions that do not provide us with flexibility to sell, refinance or rebrand a lodging property without the consent of the manager or franchisor.
Various types of catastrophic losses, such as hurricanes, floods and droughts, which can be exacerbated by climate change, or other losses caused by earthquakes, acts of terrorism, data breaches, losses related to business disruption from disputes with franchisors, losses related to business disruption caused by the Pandemic, or losses from customer litigation, may not be insurable or may not be economically insurable.
Various types of catastrophic losses, such as hurricanes, floods and droughts, which can be exacerbated by climate change, or other losses caused by earthquakes, acts of terrorism, data breaches, losses related to business disruption from disputes with franchisors, losses related to business disruption caused by infectious disease outbreaks or pandemics, or losses from customer litigation, may not be insurable or may not be economically insurable.
At December 31, 2023, our interest rate swaps were in an asset position totaling $14.0 million (see "Part II – Item 8. – Financial Statements and Supplementary Data – Note 8 – Derivative Financial Instruments and Hedging "). Our success depends on key personnel whose continued service is not guaranteed.
At December 31, 2024, our interest rate swaps were in an asset position totaling $11.6 million (see "Part II – Item 8. – Financial Statements and Supplementary Data – Note 8 – Derivative Financial Instruments and Hedging "). Our success depends on key personnel whose continued service is not guaranteed.
As of December 31, 2023, Aimbridge Hospitality or its affiliates (“Aimbridge”) managed 61 of our 100 lodging properties. Thus, a substantial portion of our revenues is generated by lodging properties managed by Aimbridge. This significant concentration of operational risk in one management company makes us more vulnerable economically than if our management was more evenly diversified among several management companies.
As of December 31, 2024, Aimbridge Hospitality or its affiliates (“Aimbridge”) managed 50 of our 97 lodging properties. Thus, a substantial portion of our revenues is generated by lodging properties managed by Aimbridge. This significant concentration of operational risk in one management company makes us more vulnerable economically than if our management was more diversified among several management companies.
If the amount of sales made through Internet intermediaries increases significantly, guestroom revenue may flatten or decrease, which could adversely affect our consolidated financial position, results of operations, and cash flows or the market price of our stock. Consumer trends and preferences, particularly with respect to younger generations, could change away from select-service lodging properties.
If the amount of sales made through OTA's increases significantly, guestroom revenue may be negatively affected, which could adversely affect our consolidated financial position, results of operations, and cash flows or the market price of our stock. 22 Consumer trends and preferences, particularly with respect to younger generations, could change away from select-service lodging properties.
In addition, our charter limits the liability of our directors and officers to us and our stockholders for money damages, except for liability resulting from: • actual receipt of an improper benefit or profit in money, property or services; or • active and deliberate dishonesty by the director or officer that was established by a final judgment as being material to the cause of action adjudicated. 26 Our charter authorizes us to indemnify our directors and officers for actions taken by them in those capacities to the maximum extent permitted by Maryland law.
In addition, our charter limits the liability of our directors and officers to us and our stockholders for money damages, except for liability resulting from: • actual receipt of an improper benefit or profit in money, property or services; or • active and deliberate dishonesty by the director or officer that was established by a final judgment as being material to the cause of action adjudicated.
Although we believe that we will be able to refinance or extend the maturity of these loans, or will have the capacity to repay them, if necessary, using draws under our 2023 Senior Credit Facility, there can be no assurance that our 2023 Senior Credit Facility will be available to repay such maturing debt, as draws under our 2023 Senior Credit Facility are subject to certain use restrictions and limitations based upon our unencumbered assets and certain financial covenants. 16 These conditions could adversely affect our consolidated financial position, results of operations, and cash flows or the market price of our stock.
However, there can be no assurance that our 2023 Senior Credit Facility will be available to repay such maturing debt as draws under our 2023 Senior Credit Facility are subject to certain use restrictions and limitations based upon our unencumbered assets and certain financial covenants. 15 These conditions could adversely affect our consolidated financial position, results of operations, and cash flows or the market price of our stock.
If states and localities in which we own material amounts of property or conduct material amounts of business make changes to their tax rates or tax regimes that increase our state and local tax liabilities, such increases could adversely affect our consolidated financial position, results of operations, and cash flows or the market price of our stock. 25 Risks Related to Our Organization and Structure Our fiduciary duties as the general partner of our Operating Partnership could create conflicts of interest.
If states and localities in which we own material amounts of property or conduct material amounts of business make changes to their tax rates or tax regimes that increase our state and local tax liabilities, such increases could adversely affect our consolidated financial position, results of operations, and cash flows or the market price of our stock.
In addition, our lodging properties (including our real property, operations and equipment) are subject to various federal, state and local environmental, health and safety regulatory requirements that address a wide variety of issues, including, but not limited to the registration, maintenance and operation of our boilers and storage tanks, air emissions from emergency generators, storm water and wastewater discharges, asbestos, lead-based paint, mold and mildew, and waste management.
Furthermore, persons who sent waste to a waste disposal facility, such as a landfill or an incinerator, may be liable for costs associated with cleanup of that facility. 23 In addition, our lodging properties (including our real property, operations and equipment) are subject to various federal, state and local environmental, health and safety regulatory requirements that address a wide variety of issues, including, but not limited to the registration, maintenance and operation of our boilers and storage tanks, air emissions from emergency generators, storm water and wastewater discharges, asbestos, lead-based paint, mold and mildew, and waste management.
Any of our efforts to reduce operating costs also could adversely affect the future growth of our business and the value of our lodging properties. Actions by organized labor could have a material adverse effect on our business.
Any of our efforts to reduce operating costs also could adversely affect the future growth of our business and the value of our lodging properties. Changes in federal or state regulations or policies may have a material adverse effect on labor markets and our business.
In the event of a substantial loss, our insurance coverage may not be sufficient to cover the operating loss or the full market value or replacement cost of our lost investment.
In the event of a substantial loss, our insurance coverage may not be sufficient to cover the operating loss or the full market value or replacement cost of our lost investment. Also, insurance costs could increase or be limited, or insurance coverage may not be available at all in the future for our lodging properties.
We are aware of no past or present environmental liability for non-compliance with environmental, health and safety laws and regulations that we believe would have a material adverse effect on our business, consolidated financial position, or results of operations. 24 Certain lodging properties we currently own or those we acquire in the future contain, may contain, or may have contained, asbestos-containing material (“ACM”).
We are aware of no past or present environmental liability for non-compliance with environmental, health and safety laws and regulations that we believe would have a material adverse effect on our business, consolidated financial position, or results of operations.
Competition could adversely affect our occupancy, ADR and RevPAR, and may require us to provide additional amenities or make capital improvements that we otherwise would not have to make.
Competition could adversely affect our occupancy, ADR and RevPAR, and may require us to provide additional amenities or make capital improvements that we otherwise would not have to make. These conditions could adversely affect our consolidated financial position, results of operations, and cash flows or the market price of our stock.
Any of these events could adversely affect our financial results, stock price and reputation, result in misstated financial reports and subject us to potential litigation and liability. 19 Portions of our information technology infrastructure or the information technology infrastructure of our third-party property managers and franchisors also may experience interruptions, delays or cessations of service or produce errors in connection with systems integration or migration work that takes place from time to time.
Portions of our information technology infrastructure or the information technology infrastructure of our third-party property managers and franchisors also may experience interruptions, delays or cessations of service or produce errors in connection with systems integration or migration work that takes place from time to time.
The states and localities in which we own material amounts of property or conduct material business operations could raise their income and property tax rates or amend their tax regimes in a manner that increases our state and local tax liabilities.
An event of default that is not timely cured could adversely affect our consolidated financial position, results of operations, and cash flows or the market price of our stock. 24 The states and localities in which we own material amounts of property or conduct material business operations could raise their income and property tax rates or amend their tax regimes in a manner that increases our state and local tax liabilities.
Further, disputes between us and our joint venture partners may result in litigation or arbitration which could increase our expenses and prevent our officers and directors from focusing their time and effort on our business and could result in subjecting the lodging properties owned by the applicable joint venture to additional risks.
Further, disputes between us and our joint venture partners may result in litigation or arbitration which could increase our expenses and prevent our officers and directors from focusing their time and effort on our business and could result in subjecting the lodging properties owned by the applicable joint venture to additional risks. 19 If a joint venture partner becomes bankrupt or otherwise defaults on its obligations under a joint venture agreement, we and any other remaining joint venture partners of that joint venture would generally remain liable for the joint venture liabilities.
In addition, pursuant to a provision in our bylaws, we have opted out of the control share provisions of the MGCL. However, our board of directors may by resolution elect to opt into the business combination provisions of the MGCL and we may, by amendment to our bylaws, opt into the control share provisions of the MGCL in the future.
However, our board of directors may by resolution elect to opt into the business combination provisions of the MGCL and we may, by amendment to our bylaws, opt into the control share provisions of the MGCL in the future. 25 Our rights and the rights of our stockholders to take action against our directors and officers are limited.
Generally, our mortgage debt carries maturity dates or call dates such that the loans become due prior to their full amortization.
Generally, our mortgage debt carries maturity dates or call dates such that the loans become due prior to their full amortization. It may be difficult to refinance or extend the maturity of such loans on terms acceptable to us, or at all.
Part of our strategy involves the use of additional debt financing to supplement our equity capital which may include our revolving credit and term loan facilities, mortgage financing and other unsecured financing.
Part of our strategy involves the use of debt financing to supplement our equity capital which may include our revolving credit and term loan facilities, mortgage financing and other unsecured financing. Our ability to effectively implement and accomplish our business strategy will be affected by our ability to obtain and use additional leverage in sufficient amounts and on favorable terms.
The costs to eliminate or alleviate cyber or other security problems, bugs, viruses, worms, malicious software programs and security vulnerabilities could be significant, and efforts to address these problems may not be successful and could result in interruptions, delays, cessation of service and loss of existing or potential business at our lodging properties.
In addition, sophisticated hardware and operating system software and applications that we and our third-party property managers or franchisors may procure from outside companies may contain defects in design or manufacture, including “bugs” and other problems that could unexpectedly interfere with our internal operations or the operations at our lodging properties. 18 The costs to eliminate or alleviate cyber or other security problems, bugs, viruses, worms, malicious software programs and security vulnerabilities could be significant, and efforts to address these problems may not be successful and could result in interruptions, delays, cessation of service and loss of existing or potential business at our lodging properties.
It may be difficult to refinance or extend the maturity of such loans on terms acceptable to us, or at all, and we may not have sufficient borrowing capacity on our 2023 Senior Credit Facility to repay any amounts that we are unable to refinance.
Furthermore, we may not have sufficient borrowing capacity on our 2023 Senior Credit Facility to repay any amounts that we are unable to refinance. We believe that we will be able to refinance or extend the maturity of these loans or will have the capacity to repay them, if necessary, using draws under our 2023 Senior Credit Facility.
As our portfolio is concentrated in select-service hotels, significant consumer shifts in preferences away from select-service hotels could adversely affect our consolidated financial position, results of operations, and cash flows or the market price of our stock. 23 Risks Related to the Real Estate Industry and Real Estate-Related Investments Illiquidity of real estate investments could significantly impede our ability to respond to adverse changes in the performance of our lodging properties or to adjust our portfolio in response to changes in economic and other conditions.
As our portfolio is concentrated in select-service hotels, significant consumer shifts in preferences away from select-service hotels could adversely affect our consolidated financial position, results of operations, and cash flows or the market price of our stock.
We may not be able to secure first mortgage financing or increase the availability under, extend the maturity of or refinance our revolving credit and term loan facilities.
However, the capital environment is often characterized by extended periods of limited availability of both debt and equity financing, increasing financing costs, stringent credit terms and significant volatility. We may not be able to secure first mortgage financing or increase the availability under, extend the maturity of or refinance our revolving credit and term loan facilities.
The ability to complete a like-kind exchange depends on many factors, including, among others, identifying and acquiring suitable replacement property within limited time periods, and the ownership structure of the properties being sold and acquired. Therefore, we are not always able to sell an asset as part of a like-kind exchange.
We may also be able to defer capital gains on property sales with 1031 Exchanges. The ability to complete 1031 Exchanges depends on many factors, including, among others, identifying and acquiring suitable replacement property within limited time periods, and the ownership structure of the properties being sold and acquired.
The sale of certain lodging properties could result in significant tax liabilities unless we are able to defer the taxable gain through like-kind exchanges under Section 1031 of the IRC ("1031 Exchanges"). From time to time, we structure asset sales for possible inclusion in like-kind exchanges within the meaning of Section 1031 of the IRC.
The sale of certain properties could result in significant tax liabilities unless we are able to offset taxable gains through tax planning strategies under the IRC including the use of net operating loss carryforwards ("NOLs") or like-kind exchanges under Section 1031 of the IRC ("1031 Exchanges").
These conditions could adversely affect our consolidated financial position, results of operations, and cash flows or the market price of our stock. 21 Our operating results and ability to make distributions to our stockholders may be adversely affected by the risks inherent to the ownership of lodging properties and the markets in which we operate.
Our operating results and ability to make distributions to our stockholders may be adversely affected by the risks inherent to the ownership of lodging properties and the markets in which we operate. Lodging properties have different economic characteristics than other real estate assets with long-term leases.
When successful, a like-kind exchange enables us to defer the taxable gain on the asset sold. Our inability to defer the taxable gain resulting from the sales of certain lodging properties, could adversely affect our consolidated financial position, results of operations, and cash flows or the market price of our stock.
Our inability to defer taxable gains from property sales using available tax planning strategies under the IRC could adversely affect our consolidated financial position, results of operations, and cash flows, or the market price of our stock. We may fail to successfully integrate acquired lodging properties or achieve expected operating performance.
Moreover, Section 1031 Exchanges now only apply to real property and do not apply to any related personal property transferred with the real property.
Therefore, we are not always able to sell an asset as part of a like-kind exchange. When successful, a like-kind exchange enables us to defer the taxable gain on the asset sold. Moreover, 1031 Exchanges now only apply to real property and do not apply to any related personal property transferred with the real property.
An event of default that is not timely cured could adversely affect our consolidated financial position, results of operations, and cash flows or the market price of our stock.
Increases in these operating expenses could adversely affect our consolidated financial position, results of operations, and cash flows or the market price of our stock. Our Operating Partnership could be treated as a publicly traded partnership taxable as a corporation for federal income tax purposes.
Removed
We may fail to successfully integrate acquired lodging properties or achieve expected operating performance.
Added
Changes in federal or state regulations or policies can have a significant effect on labor markets and our business. These potential changes in regulations or policies could adversely affect our consolidated financial position, results of operations, or the market price of our stock. Actions by organized labor could have a material adverse effect on our business.
Removed
Our ability to effectively implement and accomplish our business strategy will be affected by our ability to obtain and use additional leverage in sufficient amounts and on favorable terms. However, the capital environment is often characterized by extended periods of limited availability of both debt and equity financing, increasing financing costs, stringent credit terms and significant volatility.
Added
If we generate capital gains on property sales, we may be subject to significant tax liabilities unless we have NOLs available to offset these capital gains (at December 31, 2024, our TRSs had federal net operating losses of $48.8 million which are not subject to expiration and state net operating losses of $33.6 million, which expire beginning in 2025).
Removed
In addition, sophisticated hardware and operating system software and applications that we and our third-party property managers or franchisors may procure from outside companies may contain defects in design or manufacture, including “bugs” and other problems that could unexpectedly interfere with our internal operations or the operations at our lodging properties.
Added
These NOLs may be available to offset capital gains from future property sales. However, there can be no assurance that we will continue to have NOLs or NOLs in sufficient amount in the future to offset capital gains on property sales, if and when they occur.
Removed
If a joint venture partner becomes bankrupt or otherwise defaults on its obligations under a joint venture agreement, we and any other remaining joint venture partners of that joint venture would generally remain liable for the joint venture liabilities.
Added
Any of these events could adversely affect our financial results, stock price and reputation, result in misstated financial reports and subject us to potential litigation and liability.
Removed
Lodging properties have different economic characteristics than many other real estate assets. A typical office property owner, for example, has long-term leases with third-party tenants, which provide a relatively stable long-term stream of revenue.
Added
We may not be able to manage rapidly advancing artificial intelligence in our business which could adversely affect our competitive position. The evolution of artificial intelligence is occurring at a rapid pace. Artificial intelligence may present an opportunity to create meaningful efficiencies and improve our business performance.
Removed
Furthermore, persons who sent waste to a waste disposal facility, such as a landfill or an incinerator, may be liable for costs associated with cleanup of that facility.
Added
If we or our property managers and brand franchisors are unable to address artificial intelligence in our business, we could experience a material adverse effect on our consolidated financial position, results of operations, or the market price of our stock.
Removed
Our rights and the rights of our stockholders to take action against our directors and officers are limited.
Added
These conditions could have a material adverse effect on our business, consolidated financial position, results of operations and cash flows.
Added
Risks Related to the Real Estate Industry and Real Estate-Related Investments Illiquidity of real estate investments could significantly impede our ability to respond to adverse changes in the performance of our lodging properties or to adjust our portfolio in response to changes in economic and other conditions.
Added
Certain lodging properties we currently own or those we acquire in the future contain, may contain, or may have contained, asbestos-containing material (“ACM”).
Added
Risks Related to Our Organization and Structure Our fiduciary duties as the general partner of our Operating Partnership could create conflicts of interest.
Added
In addition, pursuant to a provision in our bylaws, we have opted out of the control share provisions of the MGCL.
Added
Our charter authorizes us to indemnify our directors and officers for actions taken by them in those capacities to the maximum extent permitted by Maryland law.
Added
We also rely on distributions from our Operating Partnership to meet any of our obligations, including tax liabilities on taxable income allocated to us from our Operating Partnership (which might make distributions to us that do not equal the tax on such allocated taxable income).
Added
Therefore, in the event of our bankruptcy, liquidation or reorganization, claims of our stockholders will be satisfied only after all of our and our Operating Partnership’s and its subsidiaries’ liabilities and obligations have been paid in full.
Added
We own approximately 87% of the Common Units in the Operating Partnership, all of the issued and outstanding 6.25% Series E Cumulative Redeemable Preferred Units of the Operating Partnership (“Series E Preferred Units”), and all of the issued and outstanding 5.875% Series F Cumulative Redeemable Preferred Units of the Operating Partnership ("Series F Preferred Units").
Added
An unrelated third-party owns all of the issued and outstanding Series Z Preferred Units that were issued in January 2022 as part of the NCI Transaction. Any future issuances by our Operating Partnership of additional Common Units or Preferred Units could reduce our ownership percentage in our Operating Partnership.
Added
Because our common stockholders do not directly own any Common Units or Preferred Units, they will not have any voting rights with respect to any such issuances or other partnership-level activities of the Operating Partnership.
Added
If we are unable to maintain an effective system of internal controls, we may not be able to produce and report accurate financial information on a timely basis or prevent fraud. A system of internal controls that is well designed and properly functioning is critical for us to produce and report accurate and reliable financial information and effectively prevent fraud.
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Item 1C. Cybersecurity
Cybersecurity — threats and controls disclosure
1 edited+2 added−1 removed8 unchanged
Item 1C. Cybersecurity
Cybersecurity — threats and controls disclosure
1 edited+2 added−1 removed8 unchanged
2023 filing
2024 filing
Biggest changeOur cybersecurity risk management program includes the following key elements: • risk assessments designed to help identify material cybersecurity risks to our critical systems, information, services, and our broader enterprise information technology ("IT") environment; • the use of external cybersecurity service providers, where appropriate, to assess, test or otherwise assist with aspects of our security processes and internal IT and risk management professionals principally responsible for directing (1) our cybersecurity risk assessment processes, (2) our security processes, and (3) our response to cybersecurity incidents; • cybersecurity awareness training of employees with access to our IT systems; • a cybersecurity incident response plan to respond to cybersecurity incidents; and • a third-party risk management process for service providers.
Biggest changeOur cybersecurity risk management program is integrated with our overall enterprise risk management program, and shares common methodologies, reporting channels and governance processes that apply across the enterprise risk management program to other legal, compliance, strategic, operational, and financial risk areas. 35 Our cybersecurity risk management program includes the following key elements: • risk assessments designed to help identify material cybersecurity risks to our critical systems, information, services, and our broader enterprise IT environment; • the use of external cybersecurity service providers, where appropriate, to assess, test or otherwise assist with aspects of our security processes and internal IT and risk management professionals principally responsible for directing (1) our cybersecurity risk assessment processes, (2) our security processes, and (3) our response to cybersecurity incidents; • cybersecurity awareness training of employees with access to our IT systems; • a cybersecurity incident response plan to respond to cybersecurity incidents; and • a third-party risk management process for service providers.
Removed
Our cybersecurity risk management program is integrated with our overall enterprise risk management program, and shares common methodologies, reporting channels and governance processes that apply across the enterprise risk management program to other legal, compliance, strategic, operational, and financial risk areas.
Added
We engage third-party cybersecurity and information technology ("IT") experts who work with our Chief Risk Officer and Chief Accounting Officer to review and test our IT environment, and to identify potential risks from cybersecurity threats and proactively mitigate their potential effect; the results of which are presented to management and the audit committee of our board of directors.
Added
Our team of IT experts hold various relevant certifications and have extensive experience in assessing, detecting, responding to and mitigating cybersecurity risks.
Item 2. Properties
Properties — owned and leased real estate
13 edited+2 added−0 removed10 unchanged
Item 2. Properties
Properties — owned and leased real estate
13 edited+2 added−0 removed10 unchanged
2023 filing
2024 filing
Biggest changeLodging property information for the year ended December 31, 2023 is as follows: Franchise/Brand Location STR Chain Scale Number of Guestrooms Marriott AC Hotel by Marriott Atlanta, GA Upscale 255 AC Hotel by Marriott (1) Houston, TX Upscale 195 AC Hotel by Marriott (2) Miami, FL Upscale 156 AC Hotel by Marriott (1) Frisco, TX Upscale 150 AC Hotel by Marriott (1) Oklahoma City, OK Upscale 142 AC Hotel by Marriott (1) Dallas, TX Upscale 128 Courtyard by Marriott Indianapolis, IN Upscale 297 Courtyard by Marriott Fort Lauderdale, FL Upscale 261 Courtyard by Marriott Nashville, TN Upscale 226 Courtyard by Marriott New Haven, CT Upscale 207 Courtyard by Marriott Fort Worth, TX Upscale 203 Courtyard by Marriott New Orleans (Convention), LA Upscale 202 Courtyard by Marriott (1) Pittsburgh, PA Upscale 183 Courtyard by Marriott Charlotte, NC Upscale 181 Courtyard by Marriott (1) Grapevine, TX Upscale 181 Courtyard by Marriott Atlanta (Decatur), GA Upscale 179 Courtyard by Marriott (1) Phoenix (Scottsdale), AZ Upscale 153 Courtyard by Marriott New Orleans (Metairie), LA Upscale 153 Courtyard by Marriott Atlanta (Downtown), GA Upscale 150 Courtyard by Marriott New Orleans (French Quarter), LA Upscale 140 Courtyard by Marriott Kansas City, MO Upscale 123 Courtyard by Marriott (1) Amarillo, TX Upscale 107 Courtyard by Marriott Dallas (Arlington), TX Upscale 103 Element (2) Miami, FL Upscale 108 Fairfield Inn & Suites by Marriott Louisville, KY Upper Midscale 140 Four Points by Sheraton San Francisco, CA Upscale 101 Marriott Boulder, CO Upper Upscale 165 Residence Inn by Marriott (1) Portland (Downtown), OR Upscale 258 Residence Inn by Marriott Baltimore (Downtown), MD Upscale 189 Residence Inn by Marriott Cleveland, OH Upscale 175 Residence Inn by Marriott Atlanta, GA Upscale 160 Residence Inn by Marriott Boston (Watertown), MA Upscale 150 Residence Inn by Marriott (1) Frisco, TX Upscale 150 Residence Inn by Marriott Baltimore (Hunt Valley), MD Upscale 141 Residence Inn by Marriott Portland (Portland Airport at Cascade Station), OR Upscale 124 Residence Inn by Marriott (1) Portland (Hillsboro), OR Upscale 122 Residence Inn by Marriott (1) Dallas, TX Upscale 121 Residence Inn by Marriott New Orleans (Metairie), LA Upscale 120 Residence Inn by Marriott (1) Scottsdale, AZ Upscale 120 Residence Inn by Marriott (1) Tyler, TX Upscale 119 Residence Inn by Marriott (1) Steamboat Springs, CO Upscale 110 Residence Inn by Marriott Branchburg, NJ Upscale 101 Residence Inn by Marriott Dallas (Arlington), TX Upscale 96 SpringHill Suites by Marriott New Orleans, LA Upscale 208 37 Franchise/Brand Location STR Chain Scale Number of Guestrooms SpringHill Suites by Marriott Louisville, KY Upscale 198 SpringHill Suites by Marriott Indianapolis, IN Upscale 156 SpringHill Suites by Marriott (1) Dallas, TX Upscale 148 SpringHill Suites by Marriott (1) Phoenix (Scottsdale), AZ Upscale 121 SpringHill Suites by Marriott Nashville, TN Upscale 78 SpringHill Suites by Marriott (1) New Orleans, LA Upscale 74 TownePlace Suites by Marriott (1) Grapevine, TX Upper Midscale 120 TownePlace Suites by Marriott (1) New Orleans, LA Upper Midscale 105 Total Marriott (52 hotel properties) 8,053 Hilton Canopy Hotel (1) New Orleans, LA Upper Upscale 176 Canopy Hotel (1) Frisco, TX Upper Upscale 150 DoubleTree Brisbane, CA Upscale 210 Embassy Suites (1) Amarillo, TX Upper Upscale 226 Embassy Suites (1) Tucson, AZ Upper Upscale 120 Hampton Inn & Suites Minneapolis, MN Upper Midscale 211 Hampton Inn & Suites Austin, TX Upper Midscale 209 Hampton Inn & Suites (1) Dallas, TX Upper Midscale 176 Hampton Inn & Suites (1) Tampa (Ybor City), FL Upper Midscale 138 Hampton Inn & Suites Ventura (Camarillo), CA Upper Midscale 116 Hampton Inn & Suites Baltimore, MD Upper Midscale 116 Hampton Inn & Suites San Diego (Poway), CA Upper Midscale 108 Hampton Inn & Suites (1) Silverthorne, CO Upper Midscale 88 Hilton Garden Inn Houston (Energy Corridor), TX Upscale 190 Hilton Garden Inn Houston (Galleria), TX Upscale 182 Hilton Garden Inn (1) San Jose (Milpitas), CA Upscale 161 Hilton Garden Inn (1) Grapevine, TX Upscale 152 Hilton Garden Inn Boston (Waltham), MA Upscale 148 Hilton Garden Inn (1) Longview, TX Upscale 122 Hilton Garden Inn Greenville, SC Upscale 120 Hilton Garden Inn (1) Bryan, TX Upscale 119 Homewood Suites (1) Aliso Viejo (Laguna Beach), CA Upscale 129 Homewood Suites (1) Tucson, AZ Upscale 122 Homewood Suites (1) Midland, TX Upscale 118 Total Hilton (24 hotel properties) 3,607 Hyatt Hyatt House Orlando, FL Upscale 168 Hyatt House Miami, FL Upscale 163 Hyatt House Denver (Englewood), CO Upscale 135 Hyatt Place Minneapolis, MN Upscale 213 Hyatt Place Chicago (Downtown), IL Upscale 206 Hyatt Place Phoenix (Mesa), AZ Upscale 152 Hyatt Place Orlando, FL Upscale 151 Hyatt Place Orlando (Universal), FL Upscale 150 Hyatt Place Portland (Portland Airport/Cascade Station), OR Upscale 136 Hyatt Place (1) Oklahoma City, OK Upscale 134 Hyatt Place Denver (Lone Tree), CO Upscale 127 Hyatt Place (1) Plano, TX Upscale 127 Hyatt Place Denver (Englewood), CO Upscale 126 Hyatt Place Phoenix (Scottsdale), AZ Upscale 126 Hyatt Place (1) Grapevine, TX Upscale 125 38 Franchise/Brand Location STR Chain Scale Number of Guestrooms Hyatt Place (1) Lubbock, TX Upscale 125 Hyatt Place Long Island (Garden City), NY Upscale 122 Total Hyatt (17 hotel properties) 2,486 IHG Holiday Inn Express & Suites San Francisco, CA Upper Midscale 252 Holiday Inn Express & Suites (1) Oklahoma City, OK Upper Midscale 124 Holiday Inn Express & Suites (1) Grapevine, TX Upper Midscale 95 Hotel Indigo Asheville, NC Upper Upscale 116 Staybridge Suites Denver (Glendale), CO Upscale 121 Total IHG (5 hotel properties) 708 Other Nordic Lodge (1) Steamboat Springs, CO Independent 47 Onera Escapes (3) Fredericksburg, TX N/A 11 Total Other (2 properties) 58 Total Portfolio (100 lodging properties) 14,912 (1) We own a 51% controlling interest in these lodging properties through our consolidated GIC Joint Venture.
Biggest changeLodging property information for the year ended December 31, 2024 is as follows: Franchise/Brand Location STR Chain Scale Number of Guestrooms Marriott AC Hotel by Marriott Atlanta, GA Upscale 255 AC Hotel by Marriott (1) Houston, TX Upscale 195 AC Hotel by Marriott (2) Miami, FL Upscale 156 AC Hotel by Marriott (1) Frisco, TX Upscale 150 AC Hotel by Marriott (1) Oklahoma City, OK Upscale 142 AC Hotel by Marriott (1) Dallas, TX Upscale 128 Courtyard by Marriott Indianapolis, IN Upscale 297 Courtyard by Marriott Fort Lauderdale, FL Upscale 261 Courtyard by Marriott Nashville, TN Upscale 226 Courtyard by Marriott New Haven, CT Upscale 207 Courtyard by Marriott Fort Worth, TX Upscale 203 Courtyard by Marriott (1) Pittsburgh, PA Upscale 183 Courtyard by Marriott Charlotte, NC Upscale 181 Courtyard by Marriott (1) Grapevine, TX Upscale 181 Courtyard by Marriott Decatur, GA Upscale 179 Courtyard by Marriott (1) Scottsdale, AZ Upscale 153 Courtyard by Marriott Metairie, LA Upscale 153 Courtyard by Marriott Atlanta, GA Upscale 150 Courtyard by Marriott New Orleans, LA Upscale 140 Courtyard by Marriott Kansas City, MO Upscale 123 Courtyard by Marriott (1) Amarillo, TX Upscale 107 Courtyard by Marriott Arlington, TX Upscale 103 Element (2) Miami, FL Upscale 108 Fairfield Inn & Suites by Marriott Louisville, KY Upper Midscale 140 Marriott Boulder, CO Upper Upscale 165 Residence Inn by Marriott (1) Portland, OR Upscale 258 Residence Inn by Marriott Baltimore, MD Upscale 189 Residence Inn by Marriott Cleveland, OH Upscale 175 Residence Inn by Marriott Atlanta, GA Upscale 160 Residence Inn by Marriott Watertown, MA Upscale 150 Residence Inn by Marriott (1) Frisco, TX Upscale 150 Residence Inn by Marriott Hunt Valley, MD Upscale 141 Residence Inn by Marriott Portland, OR Upscale 124 Residence Inn by Marriott (1) Hillsboro, OR Upscale 122 Residence Inn by Marriott (1) Dallas, TX Upscale 121 Residence Inn by Marriott Metairie, LA Upscale 120 Residence Inn by Marriott (1) Scottsdale, AZ Upscale 120 Residence Inn by Marriott (1) Tyler, TX Upscale 119 Residence Inn by Marriott (1) Steamboat Springs, CO Upscale 110 Residence Inn by Marriott Branchburg, NJ Upscale 101 Residence Inn by Marriott Arlington, TX Upscale 96 SpringHill Suites by Marriott Louisville, KY Upscale 198 SpringHill Suites by Marriott Indianapolis, IN Upscale 156 SpringHill Suites by Marriott (1) Dallas, TX Upscale 148 37 Franchise/Brand Location STR Chain Scale Number of Guestrooms SpringHill Suites by Marriott (1) Scottsdale, AZ Upscale 121 SpringHill Suites by Marriott Nashville, TN Upscale 78 SpringHill Suites by Marriott (1) New Orleans, LA Upscale 74 TownePlace Suites by Marriott (1) Grapevine, TX Upper Midscale 120 TownePlace Suites by Marriott (1) New Orleans, LA Upper Midscale 105 Total Marriott (49 hotel properties) 7,542 Hilton Canopy Hotel (1) New Orleans, LA Upper Upscale 176 Canopy Hotel (1) Frisco, TX Upper Upscale 150 DoubleTree Brisbane, CA Upscale 210 Embassy Suites (1) Amarillo, TX Upper Upscale 226 Embassy Suites (1) Tucson, AZ Upper Upscale 120 Hampton Inn & Suites (1) Revere, MA Upper Midscale 250 Hampton Inn & Suites Minneapolis, MN Upper Midscale 211 Hampton Inn & Suites Austin, TX Upper Midscale 209 Hampton Inn & Suites (1) Dallas, TX Upper Midscale 176 Hampton Inn & Suites (1) Tampa, FL Upper Midscale 138 Hampton Inn & Suites Camarillo, CA Upper Midscale 116 Hampton Inn & Suites Baltimore, MD Upper Midscale 116 Hampton Inn & Suites Poway, CA Upper Midscale 108 Hampton Inn & Suites (1) Silverthorne, CO Upper Midscale 88 Hilton Garden Inn Houston, TX Upscale 190 Hilton Garden Inn Houston, TX Upscale 182 Hilton Garden Inn (1) Milpitas, CA Upscale 161 Hilton Garden Inn (1) Grapevine, TX Upscale 152 Hilton Garden Inn (1) Vienna, VA Upscale 149 Hilton Garden Inn Waltham, MA Upscale 148 Hilton Garden Inn (1) Longview, TX Upscale 122 Hilton Garden Inn Greenville, SC Upscale 120 Homewood Suites (1) Aliso Viejo, CA Upscale 129 Homewood Suites (1) Tucson, AZ Upscale 122 Homewood Suites (1) Midland, TX Upscale 118 Total Hilton (25 hotel properties) 3,887 Hyatt Hyatt House Orlando, FL Upscale 168 Hyatt House Miami, FL Upscale 163 Hyatt House Englewood, CO Upscale 135 Hyatt Place Minneapolis, MN Upscale 213 Hyatt Place Chicago, IL Upscale 206 Hyatt Place Mesa, AZ Upscale 152 Hyatt Place Orlando, FL Upscale 151 Hyatt Place Orlando, FL Upscale 150 Hyatt Place Portland, OR Upscale 136 Hyatt Place (1) Oklahoma City, OK Upscale 134 Hyatt Place Lone Tree, CO Upscale 127 Hyatt Place Englewood, CO Upscale 126 Hyatt Place Scottsdale, AZ Upscale 126 Hyatt Place (1) Grapevine, TX Upscale 125 Hyatt Place (1) Lubbock, TX Upscale 125 Hyatt Place Garden City, NY Upscale 122 Total Hyatt (16 hotel properties) 2,359 38 Franchise/Brand Location STR Chain Scale Number of Guestrooms IHG Holiday Inn Express & Suites San Francisco, CA Upper Midscale 252 Holiday Inn Express & Suites (1) Oklahoma City, OK Upper Midscale 124 Holiday Inn Express & Suites (1) Grapevine, TX Upper Midscale 95 Hotel Indigo Asheville, NC Upper Upscale 116 Staybridge Suites Glendale, CO Upscale 121 Total IHG (5 hotel properties) 708 Other Nordic Lodge (1) Steamboat Springs, CO Independent 46 Onera (3) Fredericksburg, TX N/A 11 Total Other (2 properties) 57 Total Portfolio (97 lodging properties) 14,553 (1) We own a 51% controlling interest in these lodging properties through our consolidated GIC Joint Venture.
Ground rent for the initial lease term was prepaid in full at the time we acquired the leasehold interest.
Ground rent for the initial lease term was prepaid in full at the time we acquired the leasehold interest.
Annual ground rent currently is estimated to be $0.5 million, including performance-based incentive rent. Annual rent is increased every five years with the next adjustment coming in 2028. 39 • The Embassy Suites located in Amarillo, TX is subject to a ground lease with an initial lease termination date of October 1, 2095.
Annual ground rent currently is estimated to be $0.5 million, including performance-based incentive rent. Annual rent is increased every five years with the next adjustment coming in 2028. • The Embassy Suites located in Amarillo, TX is subject to a ground lease with an initial lease termination date of October 1, 2095.
The annual ground rent is nominal and increases every year. • The Canopy Hotel located in New Orleans, LA is subject to a ground lease with an initial lease termination date of December 31, 2054. The annual ground rent is nominal and is fixed for the first 30 years.
The annual ground rent is nominal and increases every year. 39 • The Canopy Hotel located in New Orleans, LA is subject to a ground lease with an initial lease termination date of December 31, 2054. The annual ground rent is nominal and is fixed for the first 30 years.
Our Lodging Property Operating Agreements Ground Leases At December 31, 2023, six of our lodging properties are subject to third-party ground lease agreements that cover all of the land underlying the respective lodging property. • The Residence Inn by Marriott located in Portland (Portland Airport at Cascade Station), OR is subject to a ground lease with an initial lease termination date of June 30, 2084 with one option to extend for an additional 14 years.
Our Lodging Property Operating Agreements Ground Leases At December 31, 2024, six of our lodging properties are subject to third-party ground lease agreements that cover all of the land underlying the respective lodging property. • The Residence Inn by Marriott located in Portland (Portland Airport at Cascade Station), OR is subject to a ground lease with an initial lease termination date of June 30, 2084 with one option to extend for an additional 14 years.
Franchise Agreements At December 31, 2023, all except for two of our lodging properties operate under franchise agreements, or similar agreements, that allow for access to reservation systems, with Marriott, Hilton, Hyatt, or IHG. We believe that the public’s perception of the quality associated with a branded lodging property is an important feature in its attractiveness to guests.
Franchise Agreements At December 31, 2024, all except for two of our lodging properties operate under franchise agreements, or similar agreements, that allow for access to reservation systems with Marriott, Hilton, Hyatt, or IHG. We believe that the public’s perception of the quality associated with a branded lodging property can be an important feature in its attractiveness to guests.
Annual ground rent currently is estimated to be $0.5 million, including performance-based incentive rent.
Annual ground rent currently is estimated to be $0.4 million, including performance-based incentive rent.
We do not, and will not, have any ownership or economic interest in any of the property management companies engaged by our TRS Lessees. 40
We do not have any ownership or economic interest in any of the property management companies engaged by our TRS Lessees.
We have two independent lodging properties with a total of 58 guestrooms.
We have two independent lodging properties with a total of 57 guestrooms.
Property Management Agreements At December 31, 2023, all of our lodging properties are operated pursuant to property management agreements with professional third-party property management companies as follows: Management Company Number of Properties Number of Guestrooms Affiliates of Aimbridge Hospitality 61 9,096 OTO Development, LLC 12 1,765 Stonebridge Realty Advisors, Inc. and affiliates 8 1,143 Affiliates of Marriott, including Courtyard Management Corporation, SpringHill SMC Corporation and Residence Inn by Marriott, Inc. 6 973 Crestline Hotels & Resorts, LLC 5 617 White Lodging Services Corporation 2 453 Hersha Hospitality Management 2 338 Concord Hospitality Enterprises 2 264 InterContinental Hotel Group Resources, Inc., an affiliate of IHG 1 252 Blink Data Services, LLC 1 11 Total 100 14,912 Our typical property management agreement requires us to pay a base fee to our property manager calculated as a percentage of total property revenues.
Property Management Agreements At December 31, 2024, all of our lodging properties are operated pursuant to property management agreements with professional third-party property management companies as follows: Management Company Number of Properties Number of Guestrooms Affiliates of Aimbridge Hospitality, LLC 50 7,525 OTO Development, LLC 11 1,559 Affiliates of Magna Hospitality Group, L.C. 10 1,619 Stonebridge Realty Advisors, Inc. and affiliates 7 1,042 Crestline Hotels & Resorts, LLC 7 927 Affiliates of Marriott, including Courtyard Management Corporation, SpringHill SMC Corporation and Residence Inn by Marriott, Inc. 4 563 White Lodging Services Corporation 2 453 Hersha Hospitality Management 2 338 Concord Hospitality Enterprises Company, LLC 2 264 InterContinental Hotel Group Resources, Inc., an affiliate of IHG 1 252 Blink Data Services, LLC 1 11 Total 97 14,553 Our typical property management agreement requires us to pay a base fee to our property manager calculated as a percentage of total property revenues.
Our Portfolio According to current chain scales as defined by STR, as of December 31, 2023, six of our lodging properties with a total of 953 guestrooms are categorized as Upper Upscale hotels, 78 of our lodging properties with a total of 11,903 guestrooms are categorized as Upscale hotels, and 14 of our lodging properties with a total of 1,998 guestrooms are categorized as Upper Midscale hotels.
Our Portfolio According to current chain scales as defined by STR, as of December 31, 2024, six of our lodging properties with a total of 953 guestrooms are categorized as Upper Upscale hotels, 74 of our lodging properties with a total of 11,295 guestrooms are categorized as Upscale hotels, and 15 of our lodging properties with a total of 2,248 guestrooms are categorized as Upper Midscale hotels.
The land parcels are generally suitable for the development of new lodging properties or the development of restaurants. When unique opportunities to develop lodging properties utilizing our own resources arise, we may develop our own lodging properties on occasion.
In February 2025, we closed on the sale of the parcel of undeveloped land in San Antonio, TX for $1.3 million. The land parcels are generally suitable for the development of new lodging properties or the development of restaurants. When unique opportunities to develop lodging properties utilizing our own resources arise, we may develop our own lodging properties on occasion.
(2) We own a 90% controlling interest in these lodging properties through our consolidated Brickell Joint Venture. (3) We own a 90% controlling interest in this lodging property through our consolidated Onera Joint Venture. In addition to our lodging property portfolio, we own two parcels of undeveloped land that are designated as held for sale.
(2) We own a 90% controlling interest in these lodging properties through our consolidated Brickell Joint Venture. (3) We own a 90% controlling interest in this lodging property through our consolidated Onera Joint Venture.
Added
In addition to our lodging property portfolio, we own a 5.99-acre parcel of undeveloped land in San Antonio, TX and a 1.29-acre parcel of undeveloped land in Flagstaff, AZ that are designated as Assets held for sale at December 31, 2024.
Added
However, we have a purchase option to acquire a 10% to 15% equity interest in the entity that owns the Onera brand, which is an affiliate of Blink Data Services, LLC, if we reach certain investment thresholds in Onera-branded properties.
Item 3. Legal Proceedings
Legal Proceedings — active lawsuits and investigations
1 edited+0 added−0 removed0 unchanged
Item 3. Legal Proceedings
Legal Proceedings — active lawsuits and investigations
1 edited+0 added−0 removed0 unchanged
2023 filing
2024 filing
Biggest changeItem 3. Legal Proceedings. We are involved from time to time in litigation arising in the ordinary course of business; however, there are currently no pending legal actions that we believe would have a material adverse effect on our consolidated financial position or results of operations. Item 4. Mine Safety Disclosures. Not applicable. 41 PART II
Biggest changeItem 3. Legal Proceedings. We are involved from time to time in litigation arising in the ordinary course of business; however, there are currently no pending legal actions that we believe would have a material adverse effect on our consolidated financial position or results of operations. 40 Item 4. Mine Safety Disclosures. Not applicable. 41 PART II
Item 5. Market for Registrant's Common Equity
Market for Common Equity — stock, dividends, buybacks
4 edited+1 added−33 removed9 unchanged
Item 5. Market for Registrant's Common Equity
Market for Common Equity — stock, dividends, buybacks
4 edited+1 added−33 removed9 unchanged
2023 filing
2024 filing
Biggest changeA $0.06 per share quarterly common dividend and distribution was declared for the fourth quarter of 2023 and is payable on February 29, 2023 to stockholders and unit holders of record on February 15, 2024. Item 6. [Reserved] 43 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Biggest changeOur Board also declared a quarterly cash dividend of $0.08 per share on our common stock and per Common Unit of the Operating Partnership. These dividends are payable February 28, 2025 to stockholders and unitholders of record on February 14, 2025. Item 6. [Reserved] 43
The last reported sale price for our common stock as reported on the NYSE on February 9, 2024 was $6.64 per share. Stockholder Information As of February 9, 2024, our common stock was held of record by 263 holders and there were 107,593,373 shares of our common stock outstanding.
The last reported sale price for our common stock as reported on the NYSE on February 13, 2025 was $6.58 per share. Stockholder Information As of February 13, 2025, our common stock was held of record by 251 holders and there were 109,781,527 shares of our common stock outstanding.
Hotels Index $ 100.00 $ 115.88 $ 85.39 $ 97.80 $ 82.76 $ 94.91 This performance graph shall not be deemed “filed” for purposes of Section 18 of the Exchange Act, or incorporated by reference into any filing of Summit Hotel Properties, Inc.
Hotels Index $ 100.00 $ 73.69 $ 84.40 $ 71.42 $ 81.91 $ 79.75 This performance graph shall not be deemed “filed” for purposes of Section 18 of the Exchange Act or incorporated by reference into any filing of Summit Hotel Properties, Inc.
For the Years Ended December 31, Index 2018 2019 2020 2021 2022 2023 Summit Hotel Properties, Inc. $ 100.00 $ 134.90 $ 100.03 $ 108.35 $ 80.91 $ 77.90 S&P 500 Index $ 100.00 $ 131.49 $ 155.68 $ 200.37 $ 164.08 $ 207.21 Dow Jones U.S.
For the Years Ended December 31, Index 2019 2020 2021 2022 2023 2024 Summit Hotel Properties, Inc. $ 100.00 $ 74.15 $ 80.32 $ 59.98 $ 57.75 $ 61.73 S&P 500 Index $ 100.00 $ 118.40 $ 152.39 $ 124.79 $ 157.59 $ 197.02 Dow Jones U.S.
Removed
As a result of the negative financial effects of the Pandemic on our business, we suspended the declaration and payment of dividends and distributions on our common stock and operating partnership units from the first quarter of 2020 until the second quarter of 2022.
Added
In January 2025, our Board declared cash dividends of $0.390625 per share of Series E Preferred Stock and $0.3671875 per share of Series F Preferred Stock. The Board also declared on behalf of the Operating Partnership, a cash dividend of $0.328125 per share of the Operating Partnership's Series Z Preferred Units.
Removed
Commencing for the third quarter of 2022, a $0.04 per share quarterly common dividend and distribution was declared, and increased to $0.06 per share in the second and third quarters of 2023.
Removed
Industry Trends and Outlook Room-night demand in the U.S. lodging industry is generally correlated to certain macroeconomic trends. Key drivers of lodging demand, and therefore hotel revenues, include changes in GDP, corporate profits, capital investments, and employment. From a cost perspective, elevated inflation has been pervasive since 2022, increasing the cost of salaries, wages, supplies, material, freight, insurance and energy.
Removed
Higher costs from broad inflationary pressures have been partially offset by lodging price increases. While growth rates have decelerated, inflation is still increasing faster than historical norms, which may continue in 2024.
Removed
During the year ended December 31, 2023, we experienced a continued recovery from the Pandemic driven increasingly by strong group travel and improvements in business transient demand, in addition to continued strength in leisure travel.
Removed
From an industry perspective, the year ended December 31, 2023 represented a new high in lodging demand, further evidence that businesses and individual consumers alike are increasingly traveling. Strong room night demand coupled with minimal forecasted growth in supply over the next several years positions the industry for continued growth.
Removed
Based on the trends noted above, we expect positive comparable hotel RevPAR growth for our portfolio for the year ended December 31, 2024. Operating Performance Metrics We use a variety of performance indicators and other information to evaluate the financial condition and operating performance of our business.
Removed
These key indicators include financial information that is prepared in accordance with GAAP, as well as other financial information that is not prepared in accordance with GAAP. In addition, we use other information that may not be financial in nature, including statistical information and comparative data.
Removed
We use this information to measure the performance of individual lodging properties, groups of lodging properties or our business as a whole. We periodically compare historical information to our internal budgets as well as industry-wide information.
Removed
These key indicators include: • Occupancy — Occupancy represents the total number of guestrooms occupied divided by the total number of guestrooms available. • Average Daily Rate — ADR represents total room revenues divided by the total number of paid occupied guestrooms. • Revenue Per Available Room — RevPAR is the product of ADR and Occupancy.
Removed
Occupancy, ADR and RevPAR are commonly used measures within the lodging industry to evaluate operating performance. RevPAR is an important metric for monitoring operating performance at the individual lodging property level and across our business as a whole.
Removed
We evaluate individual lodging property RevPAR performance on an absolute basis with comparisons to budget and prior periods, as well as on a company-wide and market-by-market basis. ADR and RevPAR are based only on room revenue. Room revenue depends on demand (as measured by occupancy), pricing (as measured by ADR), and our available supply of lodging property guestrooms.
Removed
Our ADR, occupancy and RevPAR performance may be affected by macroeconomic factors such as regional and local employment growth, personal income and corporate earnings, office vacancy rates and business relocation decisions, air travel and other business and leisure travel, new lodging property construction, and the pricing strategies of competitors.
Removed
In addition, our ADR, occupancy and RevPAR performance is dependent on the continued success of our partners, franchisors and brands. Lodging Property Portfolio Activity We continuously evaluate alternatives to refine our portfolio to drive growth and create value.
Removed
In the normal course of business, we evaluate opportunities to acquire additional properties that meet our investment criteria and opportunities to recycle capital through the disposition of properties. As such, the composition and size of our portfolio of properties may change materially over time.
Removed
Significant changes to our portfolio of properties could have a material effect on our Consolidated Financial Statements.
Removed
During the quarter ended March 31, 2022, the Operating Partnership and the GIC Joint Venture closed on the NCI Transaction for the acquisition of a portfolio of 27 lodging properties, containing an aggregate of 3,709 guestrooms, and two parking structures, containing 1,002 spaces, and various financial incentives for an aggregate purchase price of $822.0 million. 44 In May 2022, the GIC Joint Venture completed the sale of the 169-guestroom Hilton Garden Inn San Francisco Airport North in San Francisco, CA for a gross selling price of $75.0 million.
Removed
The sale of this property resulted in a net gain of $20.5 million to the GIC Joint Venture.
Removed
In June 2022, we formed the Brickell Joint Venture (see "See Part II – Item 8. – Financial Statements and Supplementary Data - Note 10 - Non-controlling Interests and Redeemable Non-controlling Interests ") to facilitate the exercise of our purchase option to acquire a 90% equity interest in the AC Hotel by Marriott and Element Miami Brickell Hotel in Miami, FL (together the "AC/Element Hotel").
Removed
The exercise price of the purchase option was $89.0 million and was primarily funded with the conversion of the mezzanine loan of $29.9 million to equity, $7.9 million in cash and the assumption of debt.
Removed
In October 2022, we completed the acquisition of a 90% equity interest in the Onera Joint Venture that owns an 11-unit glamping property for $5.2 million in cash, plus additional contingent consideration of $1.8 million paid in September 2023.
Removed
The Onera Joint Venture has a 100% fee simple interest in a lodging property consisting of an 11-unit glamping property and a 6.4-acre parcel of land. In May 2023, we completed the sale of four lodging properties for an aggregate gross selling price of $28.1 million.
Removed
The sale included two Hyatt Place hotels in the Chicago area containing a total of 277 guestrooms, a Hilton Garden Inn in the Minneapolis area containing 97 guestrooms, and a Holiday Inn Express & Suites in the Minneapolis area containing 93 guestrooms.
Removed
These lodging properties were classified as Assets Held for Sale at December 31, 2022 and their carrying values during the year then ended were reduced by $2.9 million to bring the carrying value of the properties to their net selling price less estimated costs to sell.
Removed
In June 2023, the GIC Joint Venture acquired the Residence Inn by Marriott located in Scottsdale, AZ containing 120 guestrooms for a purchase price of approximately $29.0 million and the Nordic Lodge located in Steamboat Springs, CO containing 47 guestrooms for a purchase price of approximately $13.7 million.
Removed
In December 2023, we completed the sale of the 123-guestroom Hyatt Place in Baltimore (Owings Mills), MD for a gross selling price of $8.3 million. The net selling price less costs to sell approximated the net book value of the hotel property on the sale date resulting in a nominal gain that was recorded in the fourth quarter of 2023.
Removed
During the fourth quarter of 2023, the GIC Joint Venture entered into a purchase and sale agreement with a third-party to sell the 127-guestroom Hyatt Place Dallas (Plano), TX for $10.3 million.
Removed
We reclassified the property in Assets Held for sale, net at December 31, 2023 and recorded a write-down of $4.0 million in the fourth quarter of 2023 for the excess of the net carrying amount of the portfolio of properties over the net selling price less estimated costs to sell.
Removed
We completed the sale of the property on February 15, 2024 under the terms described above. During the first quarter of 2024, we entered into two separate purchase and sale agreements with two unrelated third-parties to sell one individual lodging property and a portfolio of two lodging properties with an aggregate 529-guestrooms for an aggregate selling price of $84.0 million.
Removed
We reclassified all three of the properties to Assets Held for sale, net at December 31, 2023 and recorded a write-down of $1.4 million in the fourth quarter of 2023 for the excess of the net carrying amount of one of the lodging properties over its net selling price less estimated costs to sell.
Removed
We expect to complete the transactions during the first half of 2024. At December 31, 2023, we have a lodging property with 101-guestrooms being marketed for sale.
Removed
We have reclassified the property to Assets Held for Sale, net at December 31, 2023 and recorded a write-down of $11.3 million in the fourth quarter of 2023 for the excess of the net carrying amount of the lodging property over its net selling price less estimated costs to sell.
Removed
During the first quarter of 2023, we entered into a purchase and sale agreement with a third-party to sell a 5.99-acre parcel of undeveloped land in San Antonio, TX for $1.3 million. We expect to complete the transaction during the first half of 2024. See “Part II –
Item 6. [Reserved]
Selected Financial Data — reserved (removed by SEC in 2021)
1 edited+0 added−0 removed0 unchanged
Item 6. [Reserved]
Selected Financial Data — reserved (removed by SEC in 2021)
1 edited+0 added−0 removed0 unchanged
2023 filing
2024 filing
Biggest changeItem 6. [Reserved] 43 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 44 Item 7A. Quantitative and Qualitative Disclosures about Market Risk 61 Item 8. Financial Statements and Supplementary Data 61 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 61 Item 9A. Controls and Procedures 62 Item 9B.
Biggest changeItem 6. [Reserved] 43 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 44 Item 7A. Quantitative and Qualitative Disclosures about Market Risk 60 Item 8. Financial Statements and Supplementary Data 61 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 61 Item 9A. Controls and Procedures 62 Item 9B.
Item 7. Management's Discussion & Analysis
Management's Discussion & Analysis (MD&A) — revenue / margin commentary
0 edited+29 added−131 removed0 unchanged
Item 7. Management's Discussion & Analysis
Management's Discussion & Analysis (MD&A) — revenue / margin commentary
0 edited+29 added−131 removed0 unchanged
2023 filing
2024 filing
Removed
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources" ). Therefore, in the event of our bankruptcy, liquidation or reorganization, claims of our stockholders will be satisfied only after all of our and our Operating Partnership’s and its subsidiaries’ liabilities and obligations have been paid in full.
Added
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations. Industry Trends and Outlook Room-night demand in the U.S. lodging industry is generally correlated to certain macroeconomic trends. Key drivers of demand, and therefore lodging revenues, include changes in gross domestic product, corporate profits, capital investments, and employment.
Removed
We own approximately 87% of the Common Units in the Operating Partnership, all of the issued and outstanding 6.25% Series E Cumulative Redeemable Preferred Units of the Operating Partnership (“Series E Preferred Units”), and all of the issued and outstanding 5.875% Series F Cumulative Redeemable Preferred Units of the Operating Partnership ("Series F Preferred Units").
Added
From a cost perspective, elevated inflation increased the cost of salaries, wages, supplies, material, freight, insurance and energy in recent years. A portion of these costs were partially offset by lodging price increases. While certain costs remain above historical levels, expense growth has moderated to a pace consistent with historical long-term inflation rates.
Removed
An unrelated third-party owns all of the issued and outstanding Series Z Preferred Units that were issued in January 2022 as part of the NCI Transaction. Any future issuances by our Operating Partnership of additional Common Units or Preferred Units could reduce our ownership percentage in our Operating Partnership.
Added
During 2024, we experienced same-store revenue growth as a result of strong group and improved business transient demand which was partially offset by normalization in leisure demand.
Removed
Because our common stockholders do not directly own any Common Units or Preferred Units, they will not have any voting rights with respect to any such issuances or other partnership-level activities of the Operating Partnership.
Added
The long-term outlook for industry revenue growth remains favorable as forecasted room night demand growth and increases in average daily rate, combined with minimal supply growth, are expected to drive continued industry RevPAR growth over the next several years.
Removed
If we are unable to maintain an effective system of internal controls, we may not be able to produce and report accurate financial information on a timely basis or prevent fraud. A system of internal controls that is well designed and properly functioning is critical for us to produce and report accurate and reliable financial information and effectively prevent fraud.
Added
Operating Performance Metrics We use a variety of performance indicators and other information to evaluate the financial condition and operating performance of our business. These key indicators include financial information that is prepared in accordance with GAAP, as well as other financial information that is not prepared in accordance with GAAP.
Removed
We must also rely on the quality of the internal control environments of our third-party property managers who provide us with financial information related to our lodging properties.
Added
In addition, we use other information that may not be financial in nature, including statistical information and comparative data. We use this information to measure the performance of individual lodging properties, groups of lodging properties or our business as a whole. We periodically compare historical information to our internal budgets as well as industry-wide information.
Removed
At times, we may identify areas of internal controls that are not properly functioning as designed, that need improvement or that must be developed to ensure that we have an adequate system of internal controls.
Added
These key indicators include: • Hotel EBITDA — Hotel EBITDA is a measure of the operating performance of our lodging properties after excluding the effects of financing decisions, tax systems, and non-cash expenses such as depreciation and amortization. • Hotel Gross Operating Profit — Hotel Gross Operating Profit ("GOP") is a measure of the profitability of our lodging properties from core operations and represents Hotel EBITDA exclusive of property taxes, insurance, and management fees. • Occupancy — Occupancy represents the total number of guestrooms occupied divided by the total number of guestrooms available. • Average Daily Rate — ADR represents total room revenues divided by the total number of paid occupied guestrooms. • Revenue Per Available Room — RevPAR is the product of ADR and Occupancy.
Removed
Section 404 of the Sarbanes-Oxley Act of 2002 requires us to evaluate and report on our internal controls over financial reporting and have our independent auditors annually issue their own opinion on our internal controls over financial reporting. We cannot be certain that we will be successful in maintaining adequate internal controls over our financial reporting and processes.
Added
Occupancy, ADR and RevPAR are commonly used measures within the lodging industry to evaluate operating performance. RevPAR is an important metric for monitoring operating performance at the individual lodging property level and across our business as a whole.
Removed
Additionally, as we grow our business, our internal controls will become more complex and we will require significantly more resources to ensure that our internal controls remain effective.
Added
We evaluate individual lodging property RevPAR performance on an absolute basis with comparisons to budget and prior periods, as well as on a company-wide and market-by-market basis. ADR and RevPAR are based only on room revenue. Room revenue depends on demand (as measured by occupancy), pricing (as measured by ADR), and our available supply of lodging property guestrooms.
Removed
If we or our independent auditors discover a material weakness, the disclosure of that fact, even if promptly remedied, could cause our stockholders to lose confidence in our financial results, which could reduce the market value of our common shares.
Added
Our ADR, occupancy and RevPAR performance may be affected by macroeconomic factors such as regional and local employment growth, personal income and corporate earnings, office vacancy rates and business relocation decisions, air travel and other business and leisure travel, new lodging property construction, and the pricing strategies of competitors.
Removed
Additionally, the existence of any material weakness or significant deficiency could require management to devote substantial time and incur significant expense to remediate any such conditions. There can be no assurance that management will be able to remediate any material weaknesses in a timely manner.
Added
In addition, our ADR, occupancy and RevPAR performance is dependent on the continued success of our partners, franchisors and brands. 44 Lodging Property Portfolio Activity We continually evaluate alternatives to refine our portfolio to drive growth and create value.
Removed
Risks Related to Ownership of Our Securities The New York Stock Exchange (“NYSE”) or another nationally-recognized exchange may not continue to list our securities.
Added
In the normal course of business, we evaluate opportunities to acquire additional properties that meet our investment criteria and opportunities to recycle capital through the disposition of properties. As such, the composition and size of our portfolio of properties may change materially over time.
Removed
Our common stock trades on the NYSE under the symbol “INN,” our 6.25% Series E Cumulative Redeemable Preferred Stock trades on the NYSE under the symbol “INN-PE,” and our 5.875% Series F Cumulative Redeemable Preferred Stock trades on the NYSE under the symbol "INN-PF." In order for our securities to remain listed, we are required to meet the continued listing requirements of the NYSE or, in the alternative, any other nationally-recognized exchange to which we apply.
Added
Significant changes to our portfolio of properties could have a material effect on our Consolidated Financial Statements. In May 2023, we completed the sale of four lodging properties for an aggregate gross selling price of $28.1 million.
Removed
We may be unable to satisfy those listing requirements, and there is no guarantee our securities will remain listed on a nationally-recognized exchange.
Added
The sale included two Hyatt Place hotels in the Chicago area containing a total of 277 guestrooms, a Hilton Garden Inn in the Minneapolis area containing 97 guestrooms, and a Holiday Inn Express & Suites in the Minneapolis area containing 93 guestrooms.
Removed
If our securities are delisted from the NYSE or another nationally-recognized exchange, we could face significant material adverse consequences, including: • a limited availability of market quotations for our securities; • a limited ability of our stockholders to make transactions in our securities; • additional trading restrictions being placed on us; • reduced liquidity with respect to our securities; • a determination that our common stock is “penny stock,” which will require brokers trading in our common stock to adhere to more stringent rules, possibly resulting in a reduced level of trading activity in the secondary trading market for the common stock; • a limited amount of news and analyst coverage; and • a decreased ability to issue additional securities or obtain additional financing in the future. 28 The cash available for distribution may not be sufficient to make distributions at expected levels and we may use borrowed funds or funds from other sources to make distributions.
Added
These lodging properties were classified as Assets held for sale at December 31, 2022 and their carrying values during the year then ended were reduced by $2.9 million to write-down the carrying value of the properties to their net selling price less estimated costs to sell.
Removed
Distributions declared by us will be authorized by our board of directors in its sole discretion out of funds legally available for distribution and will depend upon a number of factors, including limitations imposed by our credit facilities, restrictions under applicable law and the capital requirements of our Company.
Added
In June 2023, the GIC Joint Venture acquired the Residence Inn by Marriott located in Scottsdale, AZ containing 120 guestrooms for a purchase price of approximately $29.0 million.
Removed
All distributions will be made at the discretion of our board of directors and will depend on our earnings, our financial condition, the requirements for qualification as a REIT, restrictions under applicable law and other factors as our board of directors may deem relevant from time to time.
Added
GIC made a capital contribution of $13.7 million, or 49% of the cash paid at closing, to the GIC Joint Venture, and the Operating Partnership made a capital contribution of $14.3 million, or 51% of the cash paid at closing to the GIC Joint Venture, along with $1.0 million of earnest money that was paid from available cash of the GIC Joint Venture to fund the purchase price.
Removed
We may be required to fund distributions from working capital, borrowings under our 2023 Senior Credit Facility, proceeds of future stock offerings or a sale of assets to the extent distributions exceed earnings or cash flows from operations. Funding distributions from working capital would restrict our operations.
Added
The Operating Partnership made its capital contribution to the GIC Joint Venture with available cash on hand and borrowings on our corporate revolving line of credit. In June 2023, the GIC Joint Venture acquired the Nordic Lodge located in Steamboat Springs, CO containing 47 guestrooms for a purchase price of approximately $13.7 million.
Removed
If we borrow from our 2023 Senior Credit Facility to pay distributions, we would be more limited in our ability to execute our strategy of using our 2023 Senior Credit Facility to fund acquisitions or capital expenditures.
Added
GIC made a capital contribution of $6.7 million, or 49% of the purchase price, to the GIC Joint Venture and the Operating Partnership made a capital contribution of $7.0 million, or 51% of the purchase price, to the GIC Joint Venture to fund the purchase price.
Removed
Finally, selling assets may require us to dispose of assets at a time or in a manner that is not consistent with our disposition strategy. If we borrow to fund distributions, our leverage ratios and future interest costs would increase, thereby reducing our earnings and cash available for distribution from what they otherwise would have been.
Added
The Operating Partnership made its capital contribution to the GIC Joint Venture with available cash on hand and borrowings on our corporate revolving line of credit. In December 2023, we completed the sale of the 123-guestroom Hyatt Place in Baltimore (Owings Mills), MD for a gross selling price of $8.3 million.
Removed
We may not be able to make distributions in the future. In addition, some of our distributions may be considered a return of capital for income tax purposes.
Added
The net selling price less costs to sell approximated the net book value of the hotel property on the sale date resulting in a nominal gain that was recorded in the fourth quarter of 2023.
Removed
If we decide to make distributions in excess of our current and accumulated earnings and profits, such distributions would generally be considered a return of capital for federal income tax purposes to the extent of the holder’s adjusted tax basis in their shares.
Added
During the fourth quarter of 2023, the GIC Joint Venture entered into a purchase and sale agreement with a third-party to sell the 127-guestroom Hyatt Place Dallas (Plano), TX for $10.3 million.
Removed
A return of capital is not taxable, but it has the effect of reducing the holder’s adjusted tax basis in its investment. If distributions exceed the adjusted tax basis of a holder’s shares, they will be treated as gain from the sale or exchange of such stock.
Added
We reclassified the property in Assets held for sale, net at December 31, 2023 and recorded a write-down of $4.0 million in the fourth quarter of 2023 for the excess of the net carrying amount of the portfolio of properties over the net selling price less estimated costs to sell.
Removed
The market price of our stock may be volatile due to numerous circumstances beyond our control. The trading prices of equity securities issued by REITs and other real estate companies historically have been affected by changes in market interest rates.
Added
We completed the sale of the property in February 2024 under the terms described above. In April 2024, we completed the sale of the 202-guestroom Courtyard by Marriott and the 208-guestroom SpringHill Suites by Marriott, both located in New Orleans, LA, for an aggregate selling price of $73.0 million, which resulted in a gain of approximately $28.3 million.
Removed
One of the factors that may influence the market price of our common or preferred stock is the annual yield from distributions on our common or preferred stock, respectively, as compared to yields on other financial instruments.
Added
In April 2024, the GIC Joint Venture completed the sale of the 119-guestroom Hilton Garden Inn - Bryan (College Station), TX for $11.0 million. The net selling price of the lodging property approximated its net book value on the closing date.
Removed
An increase in market interest rates, or a decrease in our distributions to stockholders, may lead prospective purchasers of our common or preferred stock to demand a higher annual yield, which could reduce the market price of our common or preferred stock, respectively.
Added
In October 2024, we completed the sale of the 101-guestroom Four Points by Marriott San Francisco Airport for $17.7 million, which resulted in a gain of approximately $0.4 million.
Removed
Other factors that could affect the market price of our stock include the following: • actual or anticipated variations in our quarterly results of operations; • increases in interest rates; • changes in market valuations of companies in the lodging industry; • changes in expectations of future financial performance or changes in estimates of securities analysts; • fluctuations in stock market prices and volumes; • our issuances of common stock, preferred stock, convertible notes or other securities in the future; • the inclusion of our common stock and preferred stock in equity indices, which could induce additional purchases; • the exclusion of our common stock and preferred stock from equity indices; • the addition or departure of key personnel; • announcements by us or our competitors of acquisitions, investments or strategic alliances; • unforeseen events beyond our control, such as instability in the national, European or global economy, terrorist attacks, travel-related health concerns including pandemics and epidemics, political instability, regional hostilities, increases in fuel prices, imposition of taxes or surcharges by regulatory authorities and travel-related accidents and unusual weather patterns, including natural disasters; and • changes in the tax laws or regulations to which we are subject.
Added
In December 2024, the GIC Joint Venture acquired the Hampton Inn located in Revere (Boston), MA and the Hilton Garden Inn located in Tysons Corner (Vienna), VA with an aggregate total of 399 guestrooms for a combined purchase price of $96.0 million.
Removed
The market’s perception of our growth potential and our current and potential future cash distributions, whether from operations, sales or refinancings, as well as the real estate market value of the underlying assets, may cause our common and preferred stock to trade at prices that differ from our net asset value per share.
Added
The purchase price (including approximately $0.3 million of acquisition costs) was funded through a combination of a $2.9 million escrow deposit, capital contributions from our GIC Joint Venture partner totaling $21.5 million, $49.5 million of borrowings on our expanded GIC Joint Venture Credit Facility (See “Part II – Item 8. – Financial Statements and Supplementary Data – Note 6 - Debt" ), and our capital contribution of $22.4 million from proceeds from the sale of the Four Points by Marriott San Francisco Airport and cash on hand. 45 During the first quarter of 2023, we entered into a purchase and sale agreement with a third-party to sell a 5.99-acre parcel of undeveloped land in San Antonio, TX for $1.3 million.
Removed
If we retain operating cash flow for investment purposes, working capital reserves or other purposes, these retained funds, while increasing the value of our underlying assets, may not correspondingly increase the market price of our common and preferred stock.
Added
The property was recorded in Assets held for sale, net at December 31, 2024. In February 2025, we closed the sale of the property. See “Part II –
Removed
Our failure to meet the market’s expectations with regard to future earnings and distributions likely would adversely affect the market price of our common and preferred stock. 29 The trading market for our stock may rely in part on the research and reports that industry or financial analysts publish about us or our business. We do not control these analysts.
Removed
Furthermore, if one or more of the analysts who do cover us downgrades our stock or our industry, or the stock of any of our competitors, the price of our stock could decline.
Removed
If one or more of these analysts ceases coverage of our Company, we could lose attention in the market, which in turn could cause the price of our stock to decline.
Removed
The number of shares of our common stock and preferred stock available for future sale could adversely affect the market price per share of our common stock and preferred stock, respectively, and future sales by us of shares of our common stock, preferred stock, or issuances by our Operating Partnership of Common Units may be dilutive to existing stockholders.
Removed
Sales of substantial amounts of shares of our common stock or preferred stock in the public market, or upon exchange of Common Units or exercise of any equity awards, or the perception that such sales might occur, could adversely affect the market price of our common stock and preferred stock.
Removed
As of February 9, 2024, all 15,948,628 of the Common Units are redeemable and may in the future be converted into shares of our common stock on a one-for-one basis and sold into the public market.
Removed
The exchange of Common Units for common stock, the vesting of any equity-based awards granted to certain directors, executive officers and other employees under the 2011 Equity Incentive Plan, which was amended and restated effective May 13, 2021 (as amended and restated, the “Equity Plan”), the issuance of our common stock or Common Units in connection with lodging property, portfolio or business acquisitions and other issuances of our common stock or Common Units could have an adverse effect on the market price of the shares of our common stock.
Removed
We may execute future offerings of debt securities, which would be senior to our common and preferred stock upon liquidation, and issuances of equity securities (including Common Units).
Removed
In the future we may offer debt securities and issue equity securities, including convertible notes, Common Units, preferred stock or other preferred shares that may be senior to our common stock for purposes of dividend distributions or upon liquidation.
Removed
Upon liquidation, holders of our debt securities and our preferred shares will receive distributions of our available assets prior to the holders of our common stock. Holders of our common stock are not entitled to preemptive rights or other protections against us offering senior debt or equity securities.
Removed
Therefore, additional common share issuances, directly or through convertible or exchangeable securities (including Common Units), warrants or options, will dilute the holdings of our existing common stockholders and such issuances or the perception of such issuances may reduce the market price of our common stock.
Removed
In addition, new issues of preferred stock could have a preference on liquidating distributions and a preference on dividend payments that could limit our ability to pay a dividend or make another distribution to the holders of our common stock.
Removed
Because our decision to issue securities in any future offering will depend on market conditions and other factors beyond our control, we cannot predict or estimate the amount, timing or nature of future issuances. Thus, our stockholders bear the risk of our future offerings reducing the market price of our common stock and diluting their interest in us.
Removed
Risks Related to Our Status as a REIT Failure to remain qualified as a REIT would cause us to be taxed as a regular corporation. The REIT rules and regulations are highly technical and complex.
Removed
We believe that our organization and method of operation has enabled us to meet the requirements for qualification and taxation as a REIT commencing with our short taxable year ended December 31, 2011. However, we cannot provide assurance that we will remain qualified as a REIT.
Removed
Failure to qualify as a REIT could result from a number of situations, including, without limitation: • if the leases of our lodging properties to our TRS Lessees are not respected as true leases for federal income tax purposes; • if our Operating Partnership is treated as a publicly traded partnership taxable as a corporation for federal income tax purposes; • if our existing or future property management companies do not qualify as “eligible independent contractors” or if our lodging properties are not “qualified lodging facilities,” as required by federal income tax law; or • if we fail to meet any of the required REIT qualifications. 30 If we fail to qualify as a REIT in any taxable year, we will face serious tax consequences that will substantially reduce the funds available for distributions to our stockholders because: • we would not be allowed a deduction for dividends paid to stockholders in computing our taxable income and would be subject to federal income tax at regular corporate rates; • we could be subject to increased state and local taxes; and • unless we are entitled to relief under certain federal income tax laws, we could not re-elect REIT status until the fifth calendar year after the year in which we failed to qualify as a REIT.
Removed
In addition, if we fail to qualify as a REIT, we will no longer be required to make distributions. As a result of all these factors, our failure to qualify as a REIT could impair our ability to expand our business and raise capital, and it could adversely affect the value of our stock.
Removed
Even if we continue to qualify as a REIT, we may face other tax liabilities.
Removed
Even if we continue to qualify for taxation as a REIT, we may be subject to certain federal, state and local taxes on our income and assets including, but not limited to taxes on any undistributed income, tax on income from some activities conducted as a result of a foreclosure, and state or local income, property and transfer taxes.
Removed
In addition, our TRSs are subject to regular corporate federal, state and local taxes. Any of these taxes would decrease cash available for distributions to stockholders. Failure to make required distributions would subject us to federal corporate income tax. We intend to operate in a manner so as to qualify as a REIT for federal income tax purposes.
Removed
To qualify as a REIT, we generally are required to distribute at least 90% of our REIT taxable income, determined without regard to the dividends paid deduction and excluding any net capital gain, each year to our stockholders.
Removed
To the extent that we satisfy this distribution requirement, but distribute less than 100% of our REIT taxable income, we will be subject to federal corporate income tax on our undistributed taxable income.
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Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Market Risk — interest-rate, FX, commodity exposure
6 edited+2 added−2 removed2 unchanged
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Market Risk — interest-rate, FX, commodity exposure
6 edited+2 added−2 removed2 unchanged
2023 filing
2024 filing
Biggest changeAt December 31, 2023 and 2022, we were party to six interest rate derivative agreements pursuant to which we receive variable-rate payments in exchange for making fixed-rate payments (dollars in thousands): Average Annual Effective Fixed Rate Notional Amount Contract date Effective Date Expiration Date December 31, 2023 December 31, 2022 Operating Partnership October 2, 2017 January 29, 2018 January 31, 2023 1.96% $ — $ 100,000 October 2, 2017 January 29, 2018 January 31, 2023 1.98% — 100,000 June 11, 2018 September 28, 2018 September 30, 2024 2.86% 75,000 75,000 June 11, 2018 December 31, 2018 December 31, 2025 2.92% 125,000 125,000 July 26, 2022 January 31, 2023 January 31, 2027 2.60% 100,000 100,000 July 26, 2022 January 31, 2023 January 31, 2029 2.56% 100,000 100,000 Total Operating Partnership 400,000 600,000 GIC Joint Venture March 24, 2023 July 1, 2023 January 13, 2026 3.35% 100,000 — March 24, 2023 July 1, 2023 January 13, 2026 3.35% 100,000 — Total GIC Joint Venture 200,000 — $ 600,000 $ 600,000 At December 31, 2023, after giving effect to our interest rate derivative agreements in effect as of that date, $956.4 million, or 66%, of our debt had fixed interest rates and $489.4 million, or 34%, had variable interest rates.
Biggest changeWe primarily use derivative financial instruments to manage interest rate risk. 60 At December 31, 2024, we were party to six interest rate derivative agreements pursuant to which we receive variable-rate payments in exchange for making fixed-rate payments (dollars in thousands): Average Annual Effective Fixed Rate Notional Amount Contract Date Effective Date Expiration Date December 31, 2024 Operating Partnership June 11, 2018 December 31, 2018 December 31, 2025 2.92 % $ 125,000 July 26, 2022 January 31, 2023 January 31, 2027 2.60 % 100,000 July 26, 2022 January 31, 2023 January 31, 2029 2.56 % 100,000 Total Operating Partnership 325,000 GIC Joint Venture March 24, 2023 July 1, 2023 January 13, 2026 3.35 % 100,000 March 24, 2023 July 1, 2023 January 13, 2026 3.35 % 100,000 January 19, 2024 October 1, 2024 January 13, 2026 3.77 % 100,000 Total GIC Joint Venture 300,000 Total 3.09 % (1) $ 625,000 (1) Represents the weighted-average effective interest rate of our current interest rate swaps at December 31, 2024.
At December 31, 2022, debt related to our wholly-owned properties coupled with our pro rata share of joint venture debt results in a fixed-rate debt ratio of approximately 65% of our total pro rata indebtedness when including the effect of interest rate swaps effective as of that date.
At December 31, 2024, debt related to our wholly owned properties coupled with our pro rata share of joint venture debt results in a fixed-rate debt ratio of approximately 72% of our total pro rata indebtedness when including the effect of interest rate swaps effective as of that date.
The consolidated financial statements and supplementary data required by this item are included on pages F- 1 through F- 55 of this Annual Report on Form 10-K and are incorporated by reference herein.
Item 8. Financial Statements and Supplementary Data. The consolidated financial statements and supplementary data required by this item are included on pages F- 1 through F- 49 of this Annual Report on Form 10-K and are incorporated by reference herein.
At December 31, 2022, after giving effect to our interest rate derivative agreements, $758.4 million, or 51.8%, of our debt had fixed interest rates and $704.7 million, or 48.2%, had variable interest rates.
At December 31, 2023, after giving effect to our interest rate derivative agreements, $956.4 million, or 66%, of our debt had fixed interest rates and $489.4 million, or 34%, had variable interest rates.
As our fixed-rate debts mature, they will become subject to interest rate risk. We currently have scheduled payments of principal on debt during the year ended December 31, 2024 totaling approximately $16.9 million.
As our fixed-rate debts mature, they will become subject to interest rate risk. We currently have scheduled payments of principal on debt during the year ending December 31, 2025 totaling approximately $46.6 million primarily related to the loan with City National Bank of Florida which matures in June 2025.
Our primary interest rate exposure is to SOFR. We primarily use derivative financial instruments to manage interest rate risk.
Our primary interest rate exposure is to SOFR.
Removed
In January 2024, subsidiaries of the GIC Joint Venture that are borrowers under the GIC Joint Venture Term Loan entered into a $100.0 million interest rate swap to fix one-month term SOFR until January 2026. The interest rate swap has an effective date of October 1, 2024 and a termination date of January 13, 2026.
Added
At December 31, 2024, after taking into consideration our interest rate derivative agreements in effect as of that date, $930.9 million, or 66%, of our debt had fixed interest rates and $477.1 million, or 34%, had variable interest rates.
Removed
Pursuant to the interest rate swap, we will pay a fixed rate of 3.765% and receive the one-month term SOFR floating rate index. Item 8. Financial Statements and Supplementary Data.
Added
We have one interest rate swap with a notional amount of $125.0 million that expires in December 2025 and three interest rate swaps with a combined notional amount of $300.0 million that expire in January 2026. If we are unable to replace these interest rates swaps as they expire at similar terms, our interest expense may increase in the future.