CONDOR HOSPITALITY TRUST, INC. Management's Discussion and Analysis of Financial Condition and Results of
Operations should be read in conjunction with our audited consolidated financial
statements and Management's Discussion and Analysis of Financial Condition and
Results of Operations in our Annual Report on Form 10-K for the year ended
References to "we," "our," "us," and the "Company" refer to
Forward-Looking Statements
Certain information both included and incorporated by reference in this Form 10-Q may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and as such may involve known and unknown risks, uncertainties, and other factors which may cause our actual results, performance, or achievements to be materially different from future results, performance, or achievements expressed or implied by such forward-looking statements. These forward-looking statements are based on assumptions that management has made in light of experience in the business in which we operate, as well as management's perceptions of historical trends, current conditions, expected future developments, and other factors believed to be appropriate under the circumstances. These statements are not guarantees of performance or results. They involve risks, uncertainties (some of which are beyond our control), and assumptions. Management believes that these forward-looking statements are based on reasonable assumptions.
Forward-looking statements, which are based on certain assumptions and describe
our future plans, strategies, and expectations are generally identifiable by use
of the words "may," "will," "should," "expect," "anticipate," "estimate,"
"believe," "intend," or "project" or the negative thereof or other variations
thereon or comparable terminology. Factors which could have a material adverse
effect on our operations and future prospects include, but are not limited to,
changes in economic conditions generally and the real estate market
specifically, legislative/regulatory changes (including changes to laws
governing the taxation of real estate investment trusts), availability of
capital, risks associated with debt financing, interest rates, competition,
supply and demand for hotel rooms in our current and proposed market areas,
policies and guidelines applicable to real estate investment trusts, risks
related to uncertainty and disruption in global economic markets as a result of
COVID-19 (commonly referred to as the coronavirus), and other risks and
uncertainties described herein, and in our filings with the
Background
We conduct our business through a traditional umbrella partnership REIT, or
UPREIT, in which our hotel properties are owned by our operating partnership,
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In order for the income from our hotel property investments to constitute "rents
from real properties" for purposes of the gross income tests required by the
Internal Revenue Service ("IRS") for REIT qualification, the income we earn
cannot be derived from the operation of any of our hotels. Therefore, the
operating partnership and its subsidiaries lease our hotel properties to the
Company's wholly owned taxable REIT subsidiary,
Historically, as a result of the geographic areas in which we operate, the
operations of our hotels have been seasonal in nature. Generally, occupancy
rates, revenue, and operating income have been greater in the second and third
quarters of the calendar year than in the first and fourth quarters, with the
exception of our hotels located in
On
The consummation of the Portfolio Sale is subject to certain customary closing
conditions, including, among others, approval of the Portfolio Sale (the
"Portfolio Sale Proposal") by the affirmative vote of the holders of at least
50% of the outstanding shares of Company common stock entitled to vote on the
matter (the "Company Shareholder Approval"). The Purchase Agreement requires the
Company to convene a shareholders' meeting (the "Shareholder Meeting") for
purposes of obtaining the Company Shareholder Approval. The Company has
scheduled the Shareholder Meeting for
The Purchase Agreement may be terminated under certain circumstances by the
Company, including prior to obtaining the Company Shareholder Approval and after
following certain procedures and adhering to certain restrictions, if the
Company concurrently enters into a definitive agreement providing for the
implementation of a Superior Proposal and pays a termination fee to the Buyer as
described below. Upon a termination of the Purchase Agreement, under certain
circumstances, the Company will be required to pay a termination fee to the
Buyer of
Plan of Liquidation
On
The Company anticipates making a distribution of a portion of the net proceeds of the Portfolio Sale and certain of its other cash on hand after the consummation and, depending on the timing of, the Portfolio Sale and expects the final liquidating distribution, if any, to be made on or before a date that is within 24 months after shareholder approval of the Plan of Liquidation.
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The Company estimates that if the Plan of Liquidation is approved by
shareholders and if it is able to successfully implement the Portfolio Sale and
the Plan of Liquidation, then after the sale of all or substantially all of the
Company's assets and the payment of all of the Company's outstanding
liabilities, the Company will have total distributions to shareholders of
approximately
COVID-19 Pandemic
The novel coronavirus (COVID-19) has reduced travel significantly and adversely
affected the hospitality industry in general. The actual and threatened spread
of COVID-19 globally or in the regions in which we operate, or future widespread
outbreak of infectious or contagious disease, can continue to reduce national
and international travel in general. The extent to which the hospitality
industry, and thus our business, will be affected by COVID-19 will largely
depend on future developments which we cannot accurately predict, and the impact
on customer travel, including the duration of the outbreak, the continued spread
and treatment of COVID-19, the impact of new virus variants, the pace of
vaccination, and new information and developments that may emerge concerning the
severity of COVID-19 and the actions to contain COVID-19 or treat its impact,
among others. To the extent that travel activity in the
Since late
As a result of the above factors, the Company is and has taken actions at the corporate and hotel level, including, but not limited to:
?Obtaining significant modifications of its debt agreements, including extension
of the credit facility to
?Asset management working with hotel management companies to reduce all hotels operating expenses including, but not limited to, closing off multiple floors, staffing reductions and furloughs, utility consumption reductions, purchasing reductions and eliminations, contract services reductions and eliminations, food services closures, exercise facilities closures, and certain reduction and elimination of certain marketing expenditures.
?Seeking potential alternative revenue sources through health care providers, government agencies, universities and airlines.
?Obtaining Paycheck Protection Program ("PPP") loans authorized under the
recently congressionally approved Coronavirus Aid, Relief, and Economic Security
("CARES") Act totaling
?Pursuing corporate cost reductions, including staffing reductions, resulting in an approximately 30% decrease in general and administrative expenses compared to historical operations.
?Capital improvement projects have been suspended except for emergency circumstances and will remain on hold for immediate future, with the potential for the suspension to continue through 2021.
?The Company determined that it was advisable and the best business practice to
cause a temporary closure of two of its hotels, the
We believe the ongoing effects of the COVID-19 pandemic on our operations have had, and will continue to have, a material negative impact on the hospitality industry, and thus on our financial results and liquidity, and such negative impact may continue beyond the containment of the pandemic. While we cannot assure you that the
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assumptions used to estimate our future liquidity will be correct, the Company believes it can generate the liquidity required to operate through the crisis through a combination of the continued operation of our portfolio with significant cost reduction measures in place, existing availability under our credit facility, and, if necessary, additional debt and equity financings. However, there can be no assurance that the Company will be able to obtain such financing on acceptable terms or at all.
The Company's loans with
Our credit facility contains cross-default provisions which would allow the
lenders under our credit facility to declare a default and accelerate our
indebtedness to them if we default on our other loans and such default would
permit that lender to accelerate our indebtedness under any such loan. The
above-described defaults under our loan agreement with
Based on a the current status of the
In the event the Portfolio Sale occurs, the Company intends to use the proceeds to pay its liabilities, including the amounts owed under its debt agreements.
Portfolio Activity
The Company's investment strategy is to assemble a portfolio of premium-branded,
select-service hotels in the top 100 Metropolitan Statistical Areas ("MSAs")
with a particular focus on MSAs ranked between 20 to 60. Since restarting its
portfolio transformation in 2015, the Company has acquired 14 high-quality
select-service hotels representing 1,808 rooms in its target markets for a total
purchase price of
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The following table sets forth certain information with respect to the hotels
owned by us as of
Purchase Price
Hotel Name City State Rooms Acquisition Date ?(in thousands)
Hilton Garden Inn Dowell/Solomons MD 100 05/25/2012 $11,500
SpringHill Suites San Antonio TX 116 10/01/2015 $17,500
Courtyard by Marriott Jacksonville FL 120 10/02/2015 $14,000
Hotel Indigo College Park GA 142 10/02/2015 $11,000
Aloft (1) Atlanta GA 254 08/22/2016 $43,550
Aloft Leawood KS 156 12/14/2016 $22,500
Home2 Suites Lexington KY 103 03/24/2017 $16,500
Home2 Suites Round Rock TX 91 03/24/2017 $16,750
Home2 Suites Tallahassee FL 132 03/24/2017 $21,500
Home2 Suites Southaven MS 105 04/14/2017 $19,000
Hampton Inn & Suites Lake Mary FL 130 06/19/2017 $19,250
Fairfield Inn & Suites El Paso TX 124 08/31/2017 $16,400
Residence Inn Austin TX 120 08/31/2017 $22,400
TownePlace Suites Austin TX 122 01/18/2018 $19,750
Home2 Suites Summerville SC 93 02/21/2018 $16,325
Totals 1,908 $287,925 (1)Represents the purchase statistics from the purchase of this hotel by the
originally 80% owned unconsolidated Atlanta JV. The Company purchased the
remaining 20% interest in the Atlanta JV from our joint venture partner on
All of our properties are encumbered by either our credit facility or by
mortgage debt at
Acquisitions
There were no acquisitions during the three or nine months ended
Dispositions
There were no dispositions during the three or nine months ended
Operating Performance Metrics
The following tables present our same-store occupancy, average daily rate
("ADR"), and RevPAR for all our hotels owned on
Three months ended September 30,
2021 2020
Occupancy ADR RevPAR Occupancy ADR RevPAR
Total Same-Store Portfolio 70.47% $ 117.79 $ 83.00 53.15% $ 89.56 $ 47.60
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Nine months ended September 30,
2021 2020
Occupancy ADR RevPAR Occupancy ADR RevPAR
Total Same-Store Portfolio 67.49%
Total same-store RevPAR increased by 74.4% in the third quarter of 2021, driven
by both an increase in occupancy of 32.6% and an increase in ADR of 31.5% caused
by the decreased impact of the COVID-19 pandemic during the third quarter of
2021. The largest increase in RevPAR during this period were at the San Antonio
SpringHill Suites, the Austin TownePlace Suites, the
Total same-store RevPAR increased by 34.0% during the first three quarters of
2021, driven by an increase in occupancy of 32.1% and an increase in ADR of
1.4%. The Company's largest increases in RevPAR during this period were at the
Austin TownePlace Suites, the San Antonio SpringHill Suites, the
Results of Operations
Comparison of the three months ended
Three months ended September 30,
2021 2020 Change
Revenue $ 15,302 $ 8,841 $ 6,461 Hotel and property operations expense (10,110) (7,334) (2,776) Depreciation and amortization expense
(2,654) (2,780) 126
General and administrative expense (1,161) (894) (267)
Strategic alternatives, net (1,009) (636) (373)
Net loss on disposition of assets (8) (3) (5)
Net gain (loss) on derivatives and
convertible debt (3,473) 131 (3,604)
Other income (expense), net 38 (4) 42
Interest expense (2,963) (2,103) (860)
Income tax expense (27) (27) -
Net loss $ (6,065) $ (4,809) $ (1,256)
Revenue
Revenue increased by a total of
Operating Expenses and Interest Expense
Hotel and property operations expense increased by
Depreciation and amortization expense remained relatively consistent between the
third quarters of 2020 and 2021, decreasing by
Interest expense increased in total by
Strategic Alternatives, net
Expenses related to the exploration of strategic alternatives increased during the third quarter of 2021 due to the Company's exploration of strategic alternatives as previously discussed.
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The change in the gain/loss on derivatives and convertible debt was driven by
differences in the value of the Company's 2020 Convertible Notes, which were
issued during the fourth quarter of 2020. These liability-classified notes saw
an increase in their fair value of
Income Tax Expense
Income tax expense in both periods was driven primarily by income (loss) earned by the TRS as well as miscellaneous state taxes owed by the Company. Management believes the combined federal and state income tax rate for the TRS will be approximately 24%. Beginning with the second quarter of 2020, after an assessment of the realizability of deferred tax assets based on projected reversals of deferred income tax liabilities, projected future taxable income, and tax planning strategies, the Company recognized a full valuation allowance against net deferred tax assets, leading to minimal tax expense or benefit being recognized through the third quarter of 2021.
Comparison of the nine months ended
Nine months ended September 30,
2021 2020 Change
Revenue $ 39,054 $ 26,879 $ 12,175
Hotel and property operations expense (27,021) (22,238) (4,783)
Depreciation and amortization expense (7,945) (8,267) 322
General and administrative expense (3,572) (3,101) (471)
Strategic alternatives, net (1,432) (860) (572)
Net loss on disposition of assets (21) (13) (8)
Equity in earnings of joint venture - 80 (80)
Net loss on derivatives and convertible debt (11,719) (609) (11,110)
Other income (expense), net 2,437 (90) 2,527
Interest expense (7,656) (6,153) (1,503)
Income tax (expense) benefit (81) 340 (421)
Net loss $ (17,956) $ (14,032) $ (3,924)
Revenue
Revenue increased by a total of
Operating Expenses and Interest Expense
Hotel and property operations expense increased by
Depreciation and amortization expense and general and administrative expense
remained relatively consistent between the first three quarters of 2020 and
2021, decreasing by
Interest expense increased in total by
Strategic Alternatives, net
Expenses related to the exploration of strategic alternatives increased during the first three quarters of 2021 due to the Company's exploration of strategic alternatives as previously discussed.
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The change in the gain/loss on derivatives and convertible debt was driven by
differences in the value of the Company's 2020 Convertible Notes, which were
issued during the fourth quarter of 2020. These liability-classified notes saw
an increase in their fair value of
Other Income / Expense, net
The increase in other income was a result of a gain on the forgiveness of PPP
loans totaling
Income Tax Benefit (Expense)
Income tax expense in both periods was driven primarily by income (loss) earned by the TRS as well as miscellaneous state taxes owed by the Company. Management believes the combined federal and state income tax rate for the TRS will be approximately 24%. Beginning with the second quarter of 2020, after an assessment of the realizability of deferred tax assets based on projected reversals of deferred income tax liabilities, projected future taxable income, and tax planning strategies, the Company recognized a full valuation allowance against net deferred tax assets, leading to minimal tax expense or benefit being recognized through the third quarter of 2021.
Non-GAAP Financial Measures
Non-GAAP financial measures are measures of our historical financial performance
that are different from measures calculated and presented in accordance with
accounting principles generally accepted in
Funds from Operations ("FFO") & Adjusted FFO ("AFFO")
We calculate FFO in accordance with the standards established by the
We consider FFO to be a useful additional measure of performance for an equity REIT because it facilitates an understanding of the operating performance of our properties without giving effect to real estate depreciation and amortization, which assumes that the value of real estate assets diminishes predictably over time. Since real estate values have historically risen or fallen with market conditions, we believe that FFO provides a meaningful indication of our performance. We believe that AFFO provides useful supplemental information to investors regarding our ongoing operating performance that, when considered with net earnings and FFO, is beneficial to an investor's understanding of our operating performance.
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The following table reconciles net earnings (loss) to FFO and AFFO for the three
and nine months ended
Three months ended Nine months ended
September 30, September 30,
Reconciliation of Net loss to FFO and
AFFO 2021 2020 2021 2020
Net loss $ (6,065) $ (4,809) $ (17,956) $ (14,032) Depreciation and amortization expense 2,654 2,780 7,945 8,267 Depreciation and amortization expense from JV
- - - 145
Net loss on disposition of assets 8 3 21 13
FFO (3,403) (2,026) (9,990) (5,607)
Dividends undeclared on preferred stock (53) (169) (383) (458) FFO attributable to common shares and common units
(3,456) (2,195) (10,373) (6,065)
Net (gain) loss on derivatives and
convertible debt 3,473 (131) 11,719 609
Strategic alternatives, net 1,009 636 1,432 860
Stock-based compensation expense 104 70 315 236
Amortization of deferred financing fees 286 284 739 829
Amortization of deferred financing fees
from JV - - - 93
AFFO attributable to common shares and
common units $ 1,416 $ (1,336) $ 3,832 $ (3,438) Earnings Before Interest, Taxes, Depreciation, and Amortization ("EBITDA"),
EBITDAre, Adjusted EBITDAre, and
We calculate EBITDA, EBITDAre, and Adjusted EBITDAre by adding back to net earnings or loss certain non-operating expenses and certain non-cash charges which are based on historical cost accounting that we believe may be of limited significance in evaluating current performance. We believe these adjustments can help eliminate the accounting effects of depreciation and amortization and financing decisions and facilitate comparisons of core operating profitability between periods. In calculating EBITDA, we add back to net earnings or loss interest expense, loss on debt extinguishment, income tax expense, and depreciation and amortization expense. NAREIT adopted EBITDAre in order to promote an industry-wide measure of REIT operating performance. We adjust EBITDA by adding back net gain/loss on disposition of assets and impairment charges to calculate EBITDAre. To calculate Adjusted EBITDAre, we adjust EBITDAre to add back acquisition and terminated transactions expense and strategic alternatives expense, net of related receipts, which are cash charges. We also add back stock-based compensation expense and gain/loss on derivatives and convertible debt, which are non-cash charges. EBITDA, EBITDAre, and Adjusted EBITDAre, as presented, may not be comparable to similarly titled measures of other companies.
We believe EBITDA, EBITDAre, and Adjusted EBITDAre to be useful additional measures of our operating performance, excluding the impact of our capital structure (primarily interest expense), our asset base (primarily depreciation and amortization expense), and other items we do not believe are representative of the results from our core operations.
The Company further excludes general and administrative expenses, other
non-operating income or expense, and certain hotel and property operations
expenses that are not allocated to individual properties in assessing hotel
performance (primarily certain general liability and other insurance costs and
office and banking fees) from Adjusted EBITDAre to calculate
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The following table reconciles net earnings (loss) to EBITDA, EBITDAre, Adjusted
EBITDAre, and
Three months ended Nine months ended
September 30, September 30,
Reconciliation of Net loss to EBITDA, EBITDAre,
Adjusted EBITDAre, and Hotel EBITDA 2021 2020 2021 2020
Net loss $ (6,065) $ (4,809) $ (17,956) $ (14,032)
Interest expense 2,963 2,103 7,656 6,153
Interest expense from JV - - - 225
Income tax expense (benefit) 27 27 81 (340)
Depreciation and amortization expense 2,654 2,780 7,945 8,267
Depreciation and amortization expense from JV - - - 145
EBITDA (421) 101 (2,274) 418
Net loss on disposition of assets 8 3 21 13
EBITDAre (413) 104 (2,253) 431
Net loss (gain) on derivatives and convertible
debt 3,473 (131) 11,719 609
Stock-based compensation expense 104 70 315 236
Strategic alternatives, net 1,009 636 1,432 860
Adjusted EBITDAre 4,173 679 11,213 2,136
General and administrative expense, excluding
stock compensation expense 1,057 824 3,257 2,865
Other (income) expense, net (38) 4 (2,437) 90
Unallocated hotel and property operations
expense 92 55 212 278
Hotel EBITDA $ 5,284 $ 1,562 $ 12,245 $ 5,369
Revenue $ 15,302 $ 8,841 $ 39,054 $ 26,879
JV revenue - - - 1,218
Condor and JV revenue $ 15,302 $ 8,841 $ 39,054 $ 28,097
Hotel EBITDA as a percentage of revenue 34.5% 17.7% 31.4% 19.1%
Liquidity, Capital Resources, and Equity Transactions
Rights Offering
On
The Company and SREP entered into a backstop commitment agreement on
Significant Equity Transactions
The Company received put right notices from all holders of Series E Preferred
Stock of the Company effective
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plus accrued and unpaid dividends, on
Liquidity Requirements
As previously discussed, due to the COVID-19 pandemic, the hospitality industry has experienced significant drops in demand. We believe the ongoing effects of the COVID-19 pandemic on our operations have had, and will continue to have, a material negative impact on the hospitality industry, and thus on our financial results and liquidity, and such negative impact may continue beyond the containment of the pandemic. While we cannot assure you that the assumptions used to estimate our future liquidity will be correct, the Company believes it can generate the liquidity required to operate through the crisis through a combination of the continued operation of our portfolio with significant cost reduction measures in place, existing availability under our credit facility, and, if necessary, additional debt and equity financings. However, there can be no assurance that the Company will be able to obtain such financing on acceptable terms or at all.
At
Pursuant to the terms of the ninth amendment to the credit facility, an event of
default occurred when the convertible notes issued in 2020 (see Note) were not
converted to common stock or paid in full by
To maintain our REIT tax status, we generally must distribute at least 90% of our taxable income to our shareholders annually. In addition, we are subject to a 4% non-deductible excise tax if the actual amount distributed to shareholders in a calendar year is less than a minimum amount specified under the federal income tax laws. We have a general dividend policy of paying out approximately 100% of annual REIT taxable income. The actual amount of any future dividends will be determined by the Board of Directors based on our actual results of operations, economic conditions, capital expenditure requirements, and other factors that the Board of Directors deems relevant.
Additionally, as discussed in depth in Financial Covenants below, on
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debt with existing or new lenders which the Company believes it can successfully complete. However, waivers and the ability to refinance are at the discretion of the lenders, and there can be no assurance that the Company will be able to obtain such waivers or refinancing on acceptable terms or at all.
Under the loan documents with
If we fail to pay our indebtedness when due, fail to comply with covenants or
otherwise default on our loans, unless waived, we could incur higher interest
rates during the period of such loan defaults, be required to immediately pay
our indebtedness, and ultimately lose our hotels through lender foreclosure if
we are unable to obtain alternative sources of financing with acceptable terms.
Our credit facility contains cross-default provisions which would allow the
lenders under our credit facility to declare a default and accelerate our
indebtedness to them if we default on our other loans and such default would
permit that lender to accelerate our indebtedness under any such loan. The
above-described defaults under our loan agreement with
Based on a the current status of the
In the event the Portfolio Sale occurs, the Company intends to use the proceeds to pay its liabilities, including the amounts owed under its debt agreements.
Sources and Uses of Cash
Cash provided by (used in) Operating Activities. Cash related to operations was
Cash used in Investing Activities. Cash used by investing activities was
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Cash provided by Financing Activities. Cash provided by financing activities
was
Outstanding Indebtedness
Significant Debt Transactions
During the second quarter of 2021, the Company's three PPP loans, with balances
totaling
On
?Provides that the Company may borrow up to
?Increased the interest rate for the credit facility to LIBOR plus 4.00% or a
base rate plus 3.00% as of
?Waives the event of default that occurred as a result of the convertible notes
issued in 2020 (see Note 7) not being converted to common stock or paid in full
by
?Amends the foregoing event of default provision to provide that it is an event
of default if the convertible notes are not either converted to common stock or
paid in full by
?Provides that the lenders will not declare a default, accelerate our
indebtedness or otherwise take enforcement action on or before
Outstanding Debt
At
Aggregate annual principal payments on debt for the remainder of 2021 and thereafter are as follows (in thousands):
Total
Remainder of 2021
2022 25,331
2023 135,587
2024 7,840
Total $ 168,965
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Financial Covenants
We are required to satisfy various financial covenants within our debt
agreements, including the following financial covenants within our credit
facility with
?Borrowing Base Debt Service Coverage Ratio: The ratio of adjusted net operating
income from borrowing base properties to debt service for the credit facility
(assuming a 30 year amortization) must be equal to or greater than (a) 1.00 to 1
as of the end of the fiscal quarters ending
?Fixed Charge Coverage Ratio: The ratio of adjusted consolidated EBITDA to
consolidated fixed charges must be equal to or greater than (a) 1.00 to 1 as of
the end of the fiscal quarters ending
?Borrowing Base Leverage Ratio: The ratio of indebtedness outstanding under the
credit facility to borrowing base asset value (based on updated as-stabilized
appraisals) cannot exceed 65%. The covenant is first tested on
?Minimum Liquidity: Liquidity must be greater than or equal to
Pursuant to the terms of the ninth amendment to the credit facility, an event of
default occurred when the convertible notes issued in 2020 (see Note 7) were not
converted to common stock or paid in full by
We are also required to satisfy a debt yield financial covenant within our loan
agreement relating to the three properties financed by
In connection with the first amendment to the loan agreement entered into in
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We are also required to satisfy various financial covenants within our loan
agreement with
?Property-Specific Pre-Distribution Debt Service Coverage Ratio. The ratio of
adjusted net operating income for the
?Property-Specific Post-Distribution Debt Service Coverage Ratio. The ratio of
adjusted net operating income for the
?Consolidated Debt Service Coverage Ratio. The ratio of consolidated adjusted net operating income for the Company to consolidated debt service must be equal to or greater than 1.05 to 1.
Certain of the terms used in the foregoing descriptions of the financial covenants within our credit facility and loan agreement have the meanings given to them in the credit facility and loan agreement, and certain of the financial covenants are subject to pro forma adjustments for acquisitions and sales of hotel properties and for specific capital events.
As a result of the actual and anticipated unprecedented negative impact of the
COVID-19 virus on the hotel industry generally, the Company has received waivers
of compliance with financial covenants from various lenders (including
On
Under the loan documents with
The Company intends to seek any available damages in the event of litigation
that may result from the actions of
If we fail to pay our indebtedness when due, fail to comply with covenants or
otherwise default on our loans, unless waived, we could incur higher interest
rates during the period of such loan defaults, be required to immediately pay
our indebtedness, and ultimately lose our hotels through lender foreclosure if
we are unable to obtain alternative sources of financing with acceptable terms.
Our credit facility contains cross-default provisions which would allow the
lenders under our credit facility to declare a default and accelerate our
indebtedness to them if we default on our other loans and such default would
permit that lender to accelerate our indebtedness under any such loan. The
above-described defaults under our loan agreement with
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or before
As of
In the event the Portfolio Sale occurs, the Company intends to use the proceeds to pay its liabilities, including the amounts owed under its debt agreements.
Contractual Obligations
Below is a summary of our contractual obligations as of
Payments due by period
Contractual Remainder of
obligations Total 2021 2022-2023 2024-2025 2026 and After
Long-term debt
including interest (1) $ 180,694 $ 2,213 $ 170,402 $ 8,079 $ -
Equipment leases 59 5 24 8 22
Total contractual
obligations $ 180,753 $ 2,218 $ 170,426 $ 8,087 $ 22
(1)Interest rate payments on our variable rate debt have been estimated using
interest rates in effect at
We have various standing or renewable contracts with vendors. These contracts are all cancelable with immaterial or no cancellation penalties. Contract terms are generally one year or less. We also have management agreements in place for the management and operation of our hotel properties.
Off Balance Sheet Financing Transactions
We have not entered into any off balance sheet financing transactions.
Critical Accounting Policies
Our consolidated financial statements have been prepared in conformity with
Critical accounting policies are those that are both important to the presentation of our financial condition and results of operations and require management's most difficult, complex, or subjective judgments. All of our
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significant accounting policies, including certain critical accounting policies,
are disclosed in our Annual Report on Form 10-K for the year ended
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