RYMAN HOSPITALITY PROPERTIES, INC. Ryman Hospitality Properties, Inc. ("Ryman") is aDelaware corporation that conducts its operations so as to maintain its qualification as a real estate investment trust ("REIT") for federal income tax purposes. The Company conducts its business through an umbrella partnership REIT, in which all of its assets are held by, and operations are conducted through,RHP Hotel Properties, LP , a subsidiary operating partnership (the "Operating Partnership").RHP Finance Corporation , aDelaware corporation ("Finco"), was formed as a wholly-owned subsidiary of theOperating Partnership for the sole purpose of being a co-issuer of debt securities with theOperating Partnership . Neither Ryman nor Finco has any material assets, other than Ryman's investment in theOperating Partnership and theOperating Partnership's owned subsidiaries. Neither theOperating Partnership nor Finco has any business, operations, financial results or other material information, other than the business, operations, financial results and other material information described in this Quarterly Report on Form 10-Q and Ryman's other reports, documents or other information filed with theSecurities and Exchange Commission (the "SEC") pursuant to the Securities Exchange Act of 1934, as amended (the "Exchange Act"). In this report, we use the terms the "Company," "we" or "our" to refer toRyman Hospitality Properties, Inc. and its subsidiaries unless the context indicates otherwise. The following discussion and analysis should be read in conjunction with our condensed consolidated financial statements and related notes included elsewhere in this report and our audited consolidated financial statements and related notes for the year endedDecember 31, 2020 , included in our Annual Report on Form 10-K that was filed with theSEC onFebruary 26, 2021 .
Cautionary Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q contains "forward-looking statements"
intended to qualify for the safe harbor from liability established by the
Private Securities Litigation Reform Act of 1995. These forward-looking
statements concern our goals, beliefs, expectations, strategies, objectives,
plans, future operating results and underlying assumptions, and other statements
that are not necessarily based on historical facts. Without limitation, you can
identify these statements by the fact that they do not relate strictly to
historical or current facts, and these statements may contain words such as
"may," "will," "could," "should," "might," "projects," "expects," "believes,"
"anticipates," "intends," "plans," "continue," "estimate," or "pursue," or the
negative or other variations thereof or comparable terms. In particular, they
include statements relating to, among other things, future actions, strategies,
future performance, the outcome of contingencies such as legal proceedings and
future financial results. These also include statements regarding (i) future
travel, transient and group demand, the anticipated impact of the novel
coronavirus disease (COVID-19) pandemic on our results of operations and
liquidity, the expected effects of cost containment efforts, and efforts to
rebook customers for later dates in 2021 and later years; (ii) the effect of our
election to be taxed as a REIT and maintain REIT status for federal income tax
purposes; (iii) the holding of our non-qualifying REIT assets in one or more
taxable REIT subsidiaries ("TRSs"); (iv) the suspension of our dividend and our
dividend policy, including the frequency and amount of any dividend we may pay;
(v) potential growth opportunities, including future expansion of the geographic
diversity of our existing asset portfolio through acquisitions and investment in
joint ventures; (vi) Marriott International, Inc.'s ("Marriott") ability to
effectively manage our hotels and other properties; (vii) our anticipated
capital expenditures and investments; (viii) the potential operating and
financial restrictions imposed on our activities under existing and future
financing agreements including our credit facility and other contractual
arrangements with third parties, including management agreements with Marriott;
(ix) our use of cash during the remainder of 2021; (x) our ability to borrow
available funds under our credit facility; (xi) our expectations about
successfully amending the agreements governing our indebtedness should the need
arise; and (xii) any other business or operational matters. We have based these
forward-looking statements on our current expectations and projections about
future events.
We caution the reader that forward-looking statements involve risks and
uncertainties that cannot be predicted or quantified, and, consequently, actual
results may differ materially from those expressed or implied by such
forward-looking statements. Important factors that could cause actual results to
differ materially from those in the forward-looking statements include, among
other things, risks and uncertainties associated with the COVID-19 pandemic,
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including the effects of the COVID-19 pandemic on us and the hospitality and
entertainment industries generally, the effects of the COVID-19 pandemic on the
demand for travel, transient and group business (including government-imposed
restrictions or guidelines), levels of consumer confidence in the safety of
travel and group gathering as a result of COVID-19, the length and severity of
the COVID-19 pandemic in the United States and the pace of recovery following
the COVID-19 pandemic, the duration and severity of the COVID-19 pandemic in the
markets where our assets are located, the economic conditions affecting the
hospitality business generally, the geographic concentration of our hotel
properties, business levels at our hotels, our ability to remain qualified as a
REIT, our ability to execute our strategic goals as a REIT, our ability to
generate cash flows to support dividends, future board determinations regarding
the timing and amount of dividends and changes to the dividend policy, our
ability to borrow funds pursuant to our credit agreements and to refinance
indebtedness and/or to successfully amend the agreements governing our
indebtedness in the future, changes in interest rates, including future changes
from the London Inter-Bank Offered Rate ("LIBOR") to a different base rate, and
those factors described elsewhere in this Quarterly Report on Form 10-Q,
including in Item 1A, "Risk Factors," and our Annual Report on Form 10-K for
the year ended December 31, 2020 or described from time to time in our other
reports filed with the SEC .
Any forward-looking statement made in this Quarterly Report on Form 10-Q speaks
only as of the date on which the statement is made. New risks and uncertainties
arise from time to time, and it is impossible for us to predict these events or
how they may affect us. We have no duty to, and do not intend to, update or
revise the forward-looking statements we make in this Quarterly Report on
Form 10-Q, except as may be required by law.
Overview
We operate as a REIT for federal income tax purposes, specializing in group-oriented, destination hotel assets in urban and resort markets. Our core holdings include a network of five upscale, meetings-focused resorts totaling 9,917 rooms that are managed by Marriott under the Gaylord Hotels brand. These five resorts, which we refer to as ourGaylord Hotels properties, consist of theGaylord Opryland Resort & Convention Center inNashville, Tennessee ("Gaylord Opryland"), theGaylord Palms Resort & Convention Center nearOrlando, Florida ("Gaylord Palms"), theGaylord Texan Resort & Convention Center nearDallas, Texas ("Gaylord Texan"), theGaylord National Resort & Convention Center nearWashington D.C. ("Gaylord National"), and theGaylord Rockies Resort & Convention Center ("Gaylord Rockies"), which was previously owned by a joint venture (the "Gaylord Rockies joint venture"), in which we owned a 65% interest. OnMay 7, 2021 , we purchased the remaining 35% interest in the Gaylord Rockies joint venture. Our other owned hotel assets managed by Marriott include theInn at Opryland , an overflow hotel adjacent to Gaylord Opryland, and theAC Hotel atNational Harbor ,Washington D.C. ("AC Hotel "), an overflow hotel adjacent to Gaylord National. We also own and operate media and entertainment assets including theGrand Ole Opry , the legendary weekly showcase of country music's finest performers for 95 years; theRyman Auditorium , the storied live music venue and former home of theGrand Ole Opry located in downtownNashville ;WSM-AM , the Opry's radio home;Ole Red , a brand ofBlake Shelton -themed bar, music venue and event spaces; and threeNashville -based assets managed by Marriott - Gaylord Springs Golf Links ("Gaylord Springs "), theWildhorse Saloon , and the General Jackson Showboat. We also own a 50% interest in a joint venture intended to create and distribute a linear multicast and over-the-top channel dedicated to the country music lifestyle ("Circle"). Each of our award-winningGaylord Hotels properties incorporates not only high quality lodging, but also at least 400,000 square feet of meeting, convention and exhibition space, superb food and beverage options and retail and spa facilities within a single self-contained property. As a result, ourGaylord Hotels properties provide a convenient and entertaining environment for convention guests. OurGaylord Hotels properties focus on the large group meetings market inthe United States . See "Cautionary Note Regarding Forward-Looking Statements" in this Item 2 and Item 1A, "Risk Factors," in Part II of this Quarterly Report on Form 10-Q and Item 1A, "Risk Factors," in our Annual Report on Form 10-K for the year endedDecember 31, 2020 for important information regarding forward-looking statements made in this report and risks and uncertainties we face. 22 Table of Contents Impact of COVID-19 Pandemic
The novel coronavirus disease (COVID-19) pandemic has spread throughoutthe United States and continues to have an unprecedented impact on theU.S. economy. As discussed more fully in our Annual Report on Form 10-K for the year endedDecember 31, 2020 , due to the COVID-19 pandemic, we have experienced disruption of our business. While all of our assets have reopened and are operating, there is significant uncertainty surrounding the full extent of the impact of the COVID-19 pandemic on our future results of operations and financial position. We continue taking steps to preserve liquidity in order to weather the COVID-19 pandemic, and continue to pay all required debt service payments on our indebtedness, lease payments, taxes and other payables. AtJune 30, 2021 , we had$474.7 million available for borrowing under our revolving credit facility and$71.6 million in unrestricted cash on hand. Within our Hospitality segment, we, along with Marriott, have implemented various actions in order to contain costs in all areas. We have implemented similar cost containment initiatives in our Entertainment and Corporate segments. As previously disclosed in 2020, we have suspended our regular quarterly dividend payments to stockholders. Our board of directors will consider a future dividend as permitted by our credit agreement and subject to our board of director's determinations as to the amount of distributions and the timing thereof. With the exception of the Gaylord Palms expansion project and the renovation of the rooms at Gaylord National, we have deferred all non-essential capital projects. With respect to our properties that are operated under management agreements with Marriott, we are obligated to maintain an FF&E reserve account for future planned and emergency-related capital expenditures at these properties; however Marriott has suspended this obligation throughDecember 2021 , although we have made voluntary contributions to fund the rooms renovation at Gaylord National. As previously disclosed in 2020, we entered into certain amendments to the credit agreement governing our$700 million revolving credit facility (of which$225.0 million was outstanding atJune 30, 2021 ),$300 million term loan A facility and the original$500 million term loan B facility (of which$378.8 million was outstanding atJune 30, 2021 ). Together, the amendments provided for a temporary waiver of financial covenants in the credit facility throughMarch 31, 2022 (unless terminated early by us at our option) and confirm our continued ability to borrow the remaining amounts available under the revolving credit facility (subject to a minimum liquidity covenant). Additionally, in 2020 the Gaylord Rockies joint venture completed an amendment to its$800 million term loan that provided the ability to use cash for certain purposes, even during a Cash Sweep Period (as defined in the loan agreement). Beginning inJuly 2020 , the Gaylord Rockies joint venture was in a Cash Sweep Period pursuant to the loan agreement. For additional discussion of this amendment and other amendments to our credit agreement, see "Principal Debt Agreements" below. Impact on Operations. Except for Gaylord National, which reopened inJuly 2021 , and theWildhorse Saloon , which closed subsequent to theDecember 2020 downtownNashville bombing and reopened inApril 2021 , our hotels and entertainment venues reopened in the second and third quarters of 2020. We and Marriott's sales teams have been working closely with our customers to rebook previously cancelled business and, throughJune 30, 2021 , we have rebooked approximately 66% of total room nights cancelled as a result of the COVID-19 pandemic. Cancelled room nights in the six months endedJune 30, 2021 decreased 53% from the six months endedDecember 31, 2020 and group attrition as a percentage of contracted block has decreased in each sequential quarter since the onset of the COVID-19 pandemic. Occupancy within our Hospitality segment (including Gaylord National for the period it was closed) has increased each sequential month in 2021, from 11.9% inJanuary 2021 to 47.3% inJune 2021 . In addition, organic group bookings (defined as bookings unrelated to a COVID-19 pandemic rebooking) made up 56% of group room nights booked in the three months endedJune 30, 2021 , compared to 44% in the three months endedMarch 31, 2021 , 26% in the three months endedDecember 31, 2020 and 23% in the three months endedSeptember 30, 2020 . The aforementioned rebooking efforts have resulted in contracted business for 2022 that approaches or exceeds pre-pandemic levels based on pacing in 2018 for 2019. Our group ADR on-the-books for the next five years is ahead of the same time in 2018 by an average of 6.0% per year. This combined impact yields projected group rooms revenue on-the-books that we estimate is at or above
pre-pandemic levels.
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For additional discussion of the impact of the COVID-19 pandemic on our
business, see "Risk Factors" under Part I, Item 1A of our Annual Report on Form
10-K for the year ended
Gaylord Rockies Joint Venture
InMay 2021 , we purchased the remaining 35% ownership interest in the Gaylord Rockies joint venture. Prior toMay 2021 , we had a 65% ownership interest in the Gaylord Rockies joint venture, and our management concluded that the Company was the primary beneficiary of this previous variable interest entity ("VIE"). The financial position and results of operations of this previous VIE have been consolidated in the accompanying condensed consolidated financial statements included herein. We also purchased 130 acres of undeveloped land, adjacent
to Gaylord Rockies. Gaylord Palms Expansion In 2018, we began construction of a$158 million expansion ofGaylord Palms , which includes an additional 302 guest rooms and 96,000 square feet of meeting space, an expanded resort pool and events lawn, and a new multi-level parking structure. The expansion was completed inApril 2021 .
Circle
In 2019, we acquired a 50% equity interest in Circle, and we have made$17.0 million in capital contributions throughJune 30, 2021 . In addition, we intend to contribute up to an additional$4.0 million throughDecember 31, 2021 . Circle launched its broadcast network onJanuary 1, 2020 , with sixteen original shows and two major distribution partnerships. As ofJuly 2021 , Circle is available to more than 65% ofU.S. television households via over-the-air and cable television and is available through multiple online streaming services covering over 154 million monthly average users.
Senior Note Refinancing
OnFebruary 9, 2021 , we commenced a cash tender offer for any and all outstanding$400 million 5% senior notes due 2023 (the "$400 Million 5% Senior Notes") at a redemption price of$1,005.00 per$1,000 principal amount. Pursuant to the tender offer,$161.9 million aggregate principal amount of the$400 Million 5% Senior Notes were validly tendered. The Company used a portion of the proceeds from the issuance of the$600 million 4.50% senior notes discussed below to fund the tender offer. In accordance with the indenture governing the$400 Million 5% Senior Notes, subsequent to expiration of the tender offer, inFebruary 2021 we gave irrevocable notice of the redemption of all remaining$400 Million 5% Senior Notes not tendered in the tender offer. The redemption and cancellation of the remaining$400 Million 5% Senior Notes was completedApril 15, 2021 . We used a portion of the proceeds from the issuance of the$600 million 4.50% senior notes discussed below to fund the redemption. As a result of the Company's purchase of tendered$400 Million 5% Senior Notes and the redemption of all untendered$400 Million Senior Notes, we recognized a loss on extinguishment of debt of$2.9 million in the six months endedJune 30, 2021 . OnFebruary 17, 2021 , theOperating Partnership and Finco (collectively, the "Issuers") completed the private placement of$600 million in aggregate principal amount of 4.50% senior notes due 2029 (the "$600 Million 4.50% Senior Notes"). The aggregate net proceeds from the issuance of the$600 Million 4.5% Senior Notes totaled approximately$591 million , after deducting the initial purchasers' discounts, commissions and offering expenses. After using a significant portion of these net proceeds to tender and redeem the$400 Million 5% Senior Notes, we used the net proceeds to repay all of the amounts outstanding under our$700 million revolving credit facility and for general corporate purposes. 24 Table of Contents Our Long-Term Strategic Plan
Our goal is to be the nation's premier hospitality REIT for group-oriented meeting hotel assets in urban and resort markets.
Existing Hotel Property Design. OurGaylord Hotels properties focus on the large group meetings market inthe United States and incorporate meeting and exhibition space, signature guest rooms, food and beverage offerings, fitness and spa facilities and other attractions within a large hotel property so attendees' needs are met in one location. This strategy creates a better experience for both meeting planners and guests and has led to our currentGaylord Hotels properties claiming a place among the leading convention hotels in the country. Expansion ofHotel Asset Portfolio . Part of our long-term growth strategy includes acquisitions of other hotels, particularly in the group meetings sector of the hospitality industry, either alone or through joint ventures or alliances with one or more third parties. We will consider attractive investment opportunities which meet our acquisition parameters, specifically, group-oriented large hotels and overflow hotels with existing or potential leisure appeal. We are interested in highly accessible upper-upscale assets with over 400 hotel rooms in urban and resort group destination markets. We also consider assets that possess or are located near convention centers that present a repositioning opportunity and/or would significantly benefit from capital investment in additional rooms or meeting space. We plan to expand the geographic diversity of our existing asset portfolio through acquisitions. As a REIT, we do not view independent, large-scale development of resort and convention hotels as a part of our long-term growth strategy. Leverage Brand Name Awareness. We believe theGrand Ole Opry is one of the most recognized entertainment brands inthe United States . We promote theGrand Ole Opry name through various media, including ourWSM-AM radio station, the Internet and television, and through performances by theGrand Ole Opry's members, many of whom are renowned country music artists. As such, we have alliances in place with multiple distribution partners in an effort to foster brand extension. We believe that licensing our brand for products may provide an opportunity to increase revenues and cash flow with relatively little capital investment. We are continuously exploring additional products, such as television specials and retail products, through which we can capitalize on our brand affinity and awareness. To this end, we have invested in fourOle Red locations, as well as Circle. Short-Term Capital Allocation. Prior to the COVID-19 pandemic, our short-term capital allocation strategy focused on returning capital to stockholders through the payment of dividends, in addition to investing in our assets and operations. However, inMarch 2020 , we suspended our regular quarterly dividend payments. Our board of directors will consider a future dividend as permitted by our credit agreement. Any future dividend is subject to our board of director's determinations as to the amount and timing thereof. We are currently focused on managing our business through the COVID-19 pandemic and are limiting our non-essential capital expenditures.
Our Operations
Our ongoing operations are organized into three principal business segments:
? Hospitality, consisting of our
and the
Entertainment, consisting of the
?
attractions.
? Corporate and Other, consisting of our corporate expenses.
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For the three months and six months ended
Three Months Ended Six Months Ended
June 30, June 30,
Segment 2021 2020 2021 2020
Hospitality 79 % 70 % 81 % 90 %
Entertainment 21 % 30 % 19 % 10 %
Corporate and Other 0 % 0 % 0 % 0 %
As described above, our hotels and entertainment assets were closed for a period
of time in 2020 and Gaylord National reopened on July 1, 2021 . While facilities
were closed, we recorded negligible revenue, and we incurred expenses as
described below under "Operating Results - Detailed Segment Financial
Information." Our short-term strategy is to safely operate our businesses
through the COVID-19 pandemic, work with Marriot to rebook business in our
hotels, and pursue cost containment strategies. While all of our assets have
reopened and are operating, there is significant uncertainty surrounding the
full extent of the impact of the COVID-19 pandemic on our future results of
operations and financial position.
Key Performance Indicators
The operating results of our Hospitality segment are highly dependent on the volume of customers at our hotels and the quality of the customer mix at our hotels, which are managed by Marriott. These factors impact the price that Marriott can charge for our hotel rooms and other amenities, such as food and beverage and meeting space. The following key performance indicators are commonly used in the hospitality industry and are used by management to evaluate hotel performance and allocate capital expenditures:
? hotel occupancy - a volume indicator calculated by dividing total rooms sold by
total rooms available;
? average daily rate ("ADR") - a price indicator calculated by dividing room
revenue by the number of rooms sold;
revenue per available room ("RevPAR") - a summary measure of hotel results
? calculated by dividing room revenue by room nights available to guests for the
period;
total revenue per available room ("Total RevPAR") - a summary measure of hotel
? results calculated by dividing the sum of room, food and beverage and other
ancillary service revenue by room nights available to guests for the period;
and
net definite group room nights booked - a volume indicator which represents the
? total number of definite group bookings for future room nights at our hotels
confirmed during the applicable period, net of cancellations.
For the three months and six months endedJune 30, 2021 and 2020, the method of calculation of these indicators has not been changed as a result of the COVID-19 pandemic and the resulting hotel closures and is consistent with historical periods. As such, performance metrics include closed hotel room nights available. We also use certain "non-GAAP financial measures," which are measures of our historical performance that are not calculated and presented in accordance with GAAP, within the meaning of applicableSEC rules. These measures include:
Earnings Before Interest Expense, Income Taxes, Depreciation and Amortization
? for Real Estate ("EBITDAre"), Adjusted EBITDAre and Adjusted EBITDAre,
Excluding Noncontrolling Interest in Consolidated Joint Venture, and
? Funds From Operations ("FFO") available to common shareholders and unit holders
and Adjusted FFO available to common shareholders and unitholders.
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See "Non-GAAP Financial Measures" below for further discussion.
The closure, limited reopening and pandemic-constrained business levels of ourGaylord Hotels properties have resulted in the significant decrease in performance reflected in these key performance indicators and non-GAAP financial measures for the three months and six months endedJune 30, 2021 and 2020, as compared to historical periods. The results of operations of our Hospitality segment are affected by the number and type of group meetings and conventions scheduled to attend our hotels in a given period. A variety of factors can affect the results of any interim period, including the nature and quality of the group meetings and conventions attending our hotels during such period, which meetings and conventions have often been contracted for several years in advance, the level of attrition our hotels experience, and the level of transient business at our hotels during such period. We rely on Marriott, as the manager of our hotels, to manage these factors and to offset any identified shortfalls in occupancy. 27
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Selected Financial Information
The following table contains our unaudited selected summary financial data for the three months and six months endedJune 30, 2021 and 2020. The table also shows the percentage relationships to total revenues and, in the case of segment operating income, its relationship to segment revenues (in thousands, except percentages). Unaudited Unaudited Three Months Ended June 30, Six Months Ended June 30, 2021 % 2020 % 2021 % 2020 % REVENUES: Rooms$ 61,971 36.3 %$ 2,802 19.1 %$ 90,199 35.4 %$ 108,930 33.2 % Food and beverage 45,619 26.7 % 1,510 10.3 % 63,794 25.0 % 147,260 44.9 % Other hotel revenue 28,098 16.4 % 5,993 40.8 % 51,497 20.2 % 39,786 12.1 % Entertainment 35,173 20.6 % 4,376 29.8 % 49,546 19.4 % 31,735 9.7 % Total revenues 170,861 100.0 % 14,681 100.0 % 255,036 100.0 % 327,711 100.0 % OPERATING EXPENSES: Rooms 15,039 8.8 % 4,472 30.5 % 24,516 9.6 % 36,780 11.2 % Food and beverage 33,748 19.8 % 11,891 81.0 % 53,077 20.8 % 95,702 29.2 % Other hotel expenses 61,365 35.9 % 45,045 306.8 % 115,922 45.5 % 135,519 41.4 % Hotel management fees, net 2,149 1.3 % (563) (3.8) % 2,902 1.1 % 4,929 1.5 % Entertainment 25,639 15.0 % 13,457 91.7 % 44,330 17.4 % 42,803 13.1 % Corporate 8,978 5.3 % 7,258 49.4 % 16,506 6.5 % 15,394 4.7 % Preopening costs 217 0.1 % 700 4.8 % 616 0.2 % 1,501 0.5 % Gain on sale of assets - - % -
- % (317) (0.1) % (1,261) (0.4) % Credit loss on held-to-maturity securities
- - % 19,145 130.4 % - - % 24,973 7.6 %
Depreciation and amortization:
Hospitality 50,487 29.5 % 49,588 337.8 % 99,635 39.1 % 99,357 30.3 %
Entertainment 3,621 2.1 % 3,402 23.2 % 7,222 2.8 % 6,507 2.0 %
Corporate and Other 565 0.3 % 1,021 7.0 % 1,131 0.4 % 1,492 0.5 %
Total depreciation and
amortization 54,673 32.0 % 54,011 367.9 % 107,988 42.3 % 107,356 32.8 %
Total operating expenses 201,808 118.1 % 155,416 1,058.6 % 365,540 143.3 % 463,696 141.5 %
OPERATING INCOME (LOSS):
Hospitality (27,100) (20.0) % (100,128) (971.6) % (90,562) (44.1) % (76,311) (25.8) %
Entertainment 5,913 16.8 % (12,483) (285.3) % (2,006) (4.0) % (17,575) (55.4) %
Corporate and Other (9,543) (A) (8,279) (A) (17,637) (A) (16,886) (A)
Preopening costs (217) (0.1) % (700) (4.8) % (616) (0.2) % (1,501) (0.5) %
Gain on sale of assets - - % - - % 317 0.1 % 1,261 0.4 %
Credit loss on held-to-maturity
securities - - % (19,145) (130.4) % - - % (24,973) (7.6) %
Total operating loss (30,947) (18.1) % (140,735) (958.6) % (110,504) (43.3) % (135,985) (41.5) %
Interest expense (29,847) (A) (30,042) (A) (60,643) (A) (59,400) (A)
Interest income 1,451 (A) 1,854 (A) 2,821 (A) 4,225 (A)Loss on extinguishment of debt - (A) - (A) (2,949) (A) - (A) Loss from unconsolidated joint ventures (1,910) (A) (1,820) (A) (3,519) (A) (3,715) (A) Other gains and (losses), net (173) (A) (16,755)
(A) 201 (A) (16,560) (A)
Provision for income taxes (1,623) (A) (161) (A) (5,577) (A) (26,960) (A)
Net loss (63,049) (A) (187,659) (A) (180,170) (A) (238,395) (A)
Net loss attributable to
noncontrolling interest in
consolidated joint venture 4,708 (A) 14,167 (A) 16,501 (A) 18,387 (A)
Net loss attributable to
noncontrolling interest in the
Operating Partnership 422 (A) - (A) 1,229 (A) - (A)
Net loss available to common
stockholders $ (57,919) (A) $ (173,492) (A) $ (162,440) (A) $ (220,008) (A)
(A) These amounts have not been shown as a percentage of revenue because they
have no relationship to revenue.
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Summary Financial Results
Results of Operations
The following table summarizes our financial results for the three months and
six months ended June 30, 2021 and 2020 (in thousands, except percentages and
per share data):
Three Months Ended Six Months Ended
June 30, June 30,
% %
2021 2020 Change 2021 2020 Change
Total revenues $ 170,861 $ 14,681 1,063.8 % $ 255,036 $ 327,711 (22.2) %
Total operating expenses 201,808 155,416 29.9 % 365,540 463,696 (21.2) %
Operating loss (30,947) (140,735) 78.0 % (110,504) (135,985) 18.7 %
Net loss (63,049) (187,659) 66.4 % (180,170) (238,395) 24.4 %
Net loss available to
common stockholders (57,919) (173,492) 66.6 % (162,440) (220,008) 26.2 %
Net loss available to
common stockholders per
share - diluted (1.05) (3.16) 66.8 % (2.95) (4.00) 26.3 %
Total Revenues
The increase in our total revenues for the three months ended June 30, 2021 , as
compared to the same period in 2020, is attributable to increases in our
Hospitality segment and Entertainment segment of $125.4 million and $30.8
million , respectively. The decrease in our total revenues for the six months
ended June 30, 2021 , as compared to the same period in 2020, is attributable to
a decrease in our Hospitality segment of $90.5 million , partially offset by an
increase in our Entertainment segment of $17.8 million .
Total Operating Expenses
The increase in our total operating expenses for the three months endedJune 30, 2021 , as compared to the same period in 2020, is primarily the result of increases in our Hospitality segment and Entertainment segment of$51.5 million and$12.2 million , respectively, as well as a credit loss on held-to-maturity investments in the 2020 period that did not occur in the 2021 period of$19.1 million . The decrease in our total operating expenses for the six months endedJune 30, 2021 , as compared to the same period in 2020, is primarily the result of a decrease in our Hospitality segment of$76.5 million , partially offset by an increase in our Entertainment segment of$1.5 million , as well as a credit loss on held-to-maturity investments in the 2020 period that did not occur in the 2021 period of$25.0 million .
Net Loss
Our net loss of$63.0 million for the three months endedJune 30, 2021 , as compared to a net loss of$187.7 million for the same period in 2020, was primarily due to the changes in our revenues and operating expenses reflected above. The 2020 period also included a$15.0 million loss related to the forfeiture of the earnest deposit in the terminated potential acquisition of Block 21, a mixed-use entertainment, lodging, office and retail complex located inAustin, Texas ("Block 21").
Our net loss of
? A
period.
? The
terminated potential Block 21 acquisition in the 2020 period.
? A$2.9 million loss on extinguishment of debt in the 2021 period that did not occur in the 2020 period. 29 Table of Contents
Operating Results - Detailed Segment Financial Information
Hospitality Segment
Total Segment Results. The following presents the financial results of our
Hospitality segment for the three months and six months ended
Three Months Ended Six Months Ended
June 30, June 30,
% %
2021 2020 Change 2021 2020 Change
Revenues:
Rooms $ 61,971 $ 2,802 2,111.7 % $ 90,199 $ 108,930 (17.2) %
Food and beverage 45,619 1,510 2,921.1 % 63,794 147,260 (56.7) %
Other hotel revenue 28,098 5,993 368.8 % 51,497 39,786 29.4 %Total hospitality revenue 135,688 10,305 1,216.7 % 205,490 295,976 (30.6) % Hospitality operating expenses: Rooms 15,039 4,472 236.3 % 24,516 36,780 (33.3) % Food and beverage 33,748 11,891 183.8 % 53,077 95,702 (44.5) % Other hotel expenses 61,365 45,045 36.2 % 115,922 135,519 (14.5) % Management fees, net 2,149 (563) 481.7 % 2,902 4,929 (41.1) %
Depreciation and amortization 50,487 49,588 1.8 % 99,635 99,357 0.3 % Total Hospitality operating expenses 162,788 110,433 47.4 % 296,052 372,287 (20.5) % Hospitality operating loss (1)(2)$ (27,100) $ (100,128) 72.9 %$ (90,562) $ (76,311) (18.7) % Hospitality performance metrics: Occupancy 32.9 % 1.7 % 31.2 pts 24.7 % 29.4 % (4.7) pts ADR$ 202.12 $ 181.66 11.3 %$ 197.97 $ 201.51 (1.8) % RevPAR (3)$ 66.51 $ 3.05 2,080.7 %$ 48.98 $ 59.20 (17.3) % Total RevPAR (4)$ 145.63 $ 11.20 1,200.3 %$ 111.58 $ 160.85 (30.6) % Net Definite Group Room Nights Booked (5) 371,540 (206,518) 279.9
% 337,831 (622,272) 154.3 %
Hospitality segment operating loss does not include preopening costs of
million and
respectively, and
30, 2021 and 2020, respectively. Hospitality segment operating loss also does
(1) not include gain on sale of assets of
six months ended
held-to-maturity securities of
months and six months ended June 30, 2020 , respectively. See discussion of
these items below.
Hospitality segment operating loss for the three months and six months ended
respectively, in expenses directly related to the COVID-19 pandemic, which (2) are primarily employment costs. Hospitality segment operating loss for the
three months and six months ended
million and
Relief, and Economic Security Act (the "CARES Act").
We calculate Hospitality RevPAR by dividing room revenue by room nights (3) available to guests for the period. Room nights available to guests include
nights the hotels are closed. Hospitality RevPAR is not comparable to
similarly titled measures such as revenues.
We calculate Hospitality Total RevPAR by dividing the sum of room, food and
beverage, and other ancillary services revenue (which equals Hospitality (4) segment revenue) by room nights available to guests for the period. Room
nights available to guests include nights the hotels are closed. Hospitality
Total RevPAR is not comparable to similarly titled measures such as revenues.
Net definite group room nights booked includes approximately 169,000 and
(5) 734,000 group room cancellations in the three months ended
2020, respectively, and 490,000 and 1,331,000 group room cancellations in the
six months ended June 30, 2021 and 2020, respectively.
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Total Hospitality segment revenues in the three months and six months endedJune 30, 2021 include$7.6 million and$17.8 million , respectively, in attrition and cancellation fee revenue, an increase of$3.4 million and$7.9 million , respectively, from the 2020 periods. Since the beginning of 2020, we have recorded$50.6 million in attrition and cancellation fee revenue.
The percentage of group versus transient business based on rooms sold for our Hospitality segment for the periods presented was approximately as follows:
Three Months Ended Six Months Ended
June 30, June 30,
2021 2020 2021 2020
Group 37 % 3 % 31 % 77 %
Transient 63 % 97 % 69 % 23 %
Other hotel expenses for the three months and six months ended
Three Months Ended Six Months Ended
June 30, June 30,
% %
2021 2020 Change 2021 2020 ChangeAdministrative employment costs$ 18,757 $ 18,530 1.2 % $
36,379$ 57,569 (36.8) % Utilities 6,542 4,598 42.3 % 12,151 11,428 6.3 % Property taxes 7,780 8,883 (12.4) % 17,179 18,139 (5.3) % Other 28,286 13,034 117.0 %
50,213 48,383 3.8 %
Total other hotel expenses
Administrative employment costs include salaries and benefits for hotel administrative functions, including, among others, senior management, accounting, human resources, sales, conference services, engineering and security. Administrative employment costs increased slightly during the three months endedJune 30, 2021 , as compared to the same period in 2020. Administrative employment costs decreased during the six months endedJune 30, 2021 , as compared to the same period in 2020, primarily due to cost containment efforts at each of ourGaylord Hotels properties, including as a result of lower volumes, as well as Gaylord National remaining closed throughJune 30, 2021 . Utility costs increased during the three months and six months endedJune 30, 2021 , as compared to the same periods in 2020, primarily due to increases at Gaylord Opryland,Gaylord Palms and Gaylord Texan due to increased usage. Property taxes decreased during the three months and six months endedJune 30, 2021 , as compared to the 2020 periods, primarily due to a decrease at Gaylord Texan due to a reduction in assessed value driven by the impact of the COVID-19 pandemic. Other expenses, which include supplies, advertising, maintenance costs and consulting costs, increased during the three months endedJune 30, 2021 , as compared to the same period in 2020, primarily as a result of various increases at each of our Gaylord Hotel properties, other than Gaylord National, as each hotel was closed for portions of the prior year period. Other expenses increased slightly in the six months endedJune 30, 2021 , as compared to the same period in 2020, primarily due to increases at Gaylord Opryland related to increased business levels at SoundWaves, partially offset by various decreases at Gaylord National as a result of it remaining closed throughJune 30, 2021 . Each of our management agreements with Marriott for ourGaylord Hotels properties, excluding Gaylord Rockies, requires us to pay Marriott a base management fee of approximately 2% of gross revenues from the applicable property for each fiscal year or portion thereof. Additionally, an incentive management fee is based on the profitability of ourGaylord Hotels properties, excluding Gaylord Rockies, calculated on a pooled basis. The Gaylord Rockies's management agreement with Marriott requires Gaylord Rockies to pay a base management fee of 3% of gross revenues for each fiscal year or portion thereof, as well as an incentive management fee based on the profitability of the hotel. In the three months endedJune 30, 2021 and 2020, we incurred$2.9 million and$0.2 million , respectively, and in the six months endedJune 30, 2021 and 2020, we incurred$4.5 million and$6.5 million , respectively, related to base management fees for our Hospitality segment. In the three months and six months endedJune 30, 2021 and 2020, we incurred$0 related to incentive management fees for our Hospitality segment. Management fees are presented throughout this Quarterly Report on Form 10-Q net of the amortization of the deferred management rights proceeds 31 Table of Contents
discussed in Note 8, "Deferred Management Rights Proceeds," to the accompanying condensed consolidated financial statements included herein.
Total Hospitality segment depreciation and amortization expense increased
slightly in the three months and six months ended
Property-Level Results. The following presents the property-level financial results of our Hospitality segment for the three months and six months endedJune 30, 2021 and 2020.The Gaylord Hotels properties experienced higher levels of attrition and cancellations and lower occupancy levels, which are directly related to the COVID-19 pandemic, in the three months and six months endedJune 30, 2021 and 2020, and experienced heavily transient business in the three months and six months endedJune 30, 2021 . In addition, property-level financial results for the three months and six months endedJune 30, 2021 are not comparable to the three months and six months endedJune 30, 2020 due to the temporary property closures that began inlate-March 2020 , which were directly related to the COVID-19 pandemic. Therefore, the property-level financial results for the three months and six months endedJune 30, 2021 and 2020 are not comparable to historical periods. Total revenue at each of ourGaylord Hotels properties was lower than that of historical periods for the three months and six months endedJune 30, 2021 and 2020 due to the COVID-19 pandemic. Operating costs at each of ourGaylord Hotels properties were lower for the three months and six months endedJune 30, 2021 and 2020 as a result of cost containment initiatives and lower variable costs due to lower occupancies and, for the three months and six months endedJune 30, 2020 , the temporary property closures that began inlate-March 2020 due to the COVID-19 pandemic.
Gaylord Opryland Results. The results of Gaylord Opryland for the three months
and six months ended
Three Months Ended Six Months Ended
June 30, June 30,
% %
2021 2020 Change 2021 2020 Change
Revenues:
Rooms $ 22,832 $ 407 5,509.8 % $ 32,806 $ 31,277 4.9 %
Food and beverage 12,519 243 5,051.9 % 17,906 36,254 (50.6) %
Other hotel revenue 9,651 670 1,340.4 % 16,049 9,916 61.8 %
Total revenue 45,002 1,320 3,309.2 % 66,761 77,447 (13.8) %
Operating expenses:
Rooms 4,990 913 446.5 % 8,196 9,176 (10.7) %
Food and beverage 8,776 3,055 187.3 % 14,595 23,492 (37.9) %
Other hotel expenses 18,831 11,749 60.3 % 34,857 36,370 (4.2) %
Management fees, net 650 (211) 408.1 % 842 1,053 (20.0) %Depreciation and amortization 8,554 8,818 (3.0) % 17,137 17,616 (2.7) % Total operating expenses (1)(2) 41,801 24,324 71.9 %
75,627 87,707 (13.8) % Performance metrics: Occupancy 40.2 % 0.9 % 39.3 pts 29.3 % 30.6 % (1.3) pts ADR$ 216.09 $ 172.28 25.4 %$ 214.22 $ 194.22 10.3 % RevPAR$ 86.88 $ 1.55 5,505.2 %$ 62.76 $ 59.51 5.5 % Total RevPAR$ 171.23 $ 5.02 3,311.0 %$ 127.71 $ 147.34 (13.3) %
Gaylord Opryland operating expenses do not include a gain on sale of assets
(1) of
2020, respectively.
Gaylord Opryland operating expenses for the three months and six months ended
respectively, in expenses directly related to the COVID-19 pandemic, which (2) are primarily employment costs. Gaylord Opryland operating expenses for the
three months and six months ended
million in credits, which is net of $0.5 million in payroll tax credits
afforded under the CARES Act.
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Gaylord Palms Results.
Three Months Ended Six Months Ended
June 30, June 30,
% %
2021 2020 Change 2021 2020 Change
Revenues:
Rooms $ 14,643 $ 130 11,163.8 % $ 20,589 $ 17,598 17.0 %
Food and beverage 13,056 56 23,214.3 % 16,774 22,543 (25.6) %
Other hotel revenue 5,003 628 696.7 % 10,456 6,048 72.9 %
Total revenue 32,702 814 3,917.4 % 47,819 46,189 3.5 %
Operating expenses:
Rooms 3,001 491 511.2 % 4,654 4,474 4.0 %
Food and beverage 8,109 1,638 395.1 % 11,683 13,625 (14.3) %
Other hotel expenses 13,178 8,414 56.6 % 24,394 25,591 (4.7) %
Management fees, net 515 (113) 555.8 % 684 652 4.9 %Depreciation and amortization 5,302 4,126 28.5 % 9,426 8,410 12.1 % Total operating expenses (1)(2) 30,105 14,556 106.8 %
50,841 52,752 (3.6) % Performance metrics: Occupancy 52.2 % 0.8 % 51.4 pts 38.9 % 31.7 % 7.2 pts ADR$ 199.63 $ 129.79 53.8 %$ 197.28 $ 215.60 (8.5) % RevPAR$ 104.17 $ 1.01 10,213.9 %$ 76.82 $ 68.29 12.5 % Total RevPAR$ 232.64 $ 6.31 3,586.8 %$ 178.42 $ 179.23 (0.5) %
respectively, and
30, 2021 and 2020, respectively. See discussion of these items below.
respectively, in expenses directly related to the COVID-19 pandemic, which
are primarily employment costs.
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Gaylord Texan Results. The results of Gaylord Texan for the three months and six
months ended
Three Months Ended Six Months Ended
June 30, June 30,
% %
2021 2020 Change 2021 2020 Change
Revenues:
Rooms $ 14,672 $ 1,519 865.9 % $ 21,690 $ 20,545 5.6 %
Food and beverage 13,013 1,121 1,060.8 % 18,122 30,376 (40.3) %
Other hotel revenue 6,384 2,832 125.4 % 12,615 10,547 19.6 %
Total revenue 34,069 5,472 522.6 % 52,427 61,468 (14.7) %
Operating expenses:
Rooms 3,162 761 315.5 % 5,143 5,201 (1.1) %
Food and beverage 9,317 2,564 263.4 % 13,877 17,654 (21.4) %
Other hotel expenses 11,618 7,910 46.9 % 21,795 23,603 (7.7) %
Management fees, net 500 (60) 933.3 % 692 871 (20.6) %Depreciation and amortization 6,194 6,394 (3.1) % 12,423 12,857 (3.4) % Total operating expenses (1) 30,791 17,569 75.3 %
53,930 60,186 (10.4) % Performance metrics: Occupancy 43.7 % 5.0 % 38.7 pts 33.2 % 30.6 % 2.6 pts ADR$ 203.43 $ 185.45 9.7 %$ 198.82 $ 203.14 (2.1) % RevPAR$ 88.88 $ 9.20 866.1 %$ 66.06 $ 62.23 6.2 % Total RevPAR$ 206.39 $ 33.15 522.6 %$ 159.68 $ 186.18 (14.2) %
Gaylord Texan operating expenses for the three months and six months ended
(1)
respectively, in expenses directly related to the COVID-19 pandemic, which
are primarily employment costs.
Gaylord National Results. Gaylord National was closed from lateMarch 2020 and reopenedJuly 1, 2021 . The results of Gaylord National for the three months and six months endedJune 30, 2021 and 2020 are as follows (in thousands, except percentages and performance metrics): Three Months Ended Six Months Ended June 30, June 30, % % 2021 2020 Change 2021 2020 Change Revenues: Rooms $ -$ 5 (100.0) % $ -$ 19,533 (100.0) % Food and beverage 34 9 277.8 % 57 24,721 (99.8) % Other hotel revenue 2,277 515 342.1 % 3,511 5,669 (38.1) % Total revenue (1) 2,311 529 336.9 % 3,568 49,923 (92.9) % Operating expenses: Rooms 835 1,387 (39.8) % 1,035 11,004 (90.6) % Food and beverage 1,149 2,818 (59.2) % 1,588 21,417 (92.6) % Other hotel expenses 8,362 10,509 (20.4) % 16,814 31,068 (45.9) % Management fees, net (157) (192) 18.2 % (334) 579 (157.7) %
Depreciation and amortization 7,173 6,925 3.6 % 14,039 13,866 1.2 % Total operating expenses (2)(3) 17,362 21,447 (19.0) %
33,142 77,934 (57.5) % Performance metrics: Occupancy - % - % - pts - % 26.0 % (26.0) pts ADR $ - $ - - % $ -$ 207.14 (100.0) % RevPAR $ - $ - - % $ -$ 53.77 (100.0) % Total RevPAR$ 12.72 $ 2.91 337.1 %$ 9.87 $ 137.42 (92.8) %
Gaylord National revenue for the three months and six months ended
and cancellation fee revenue.
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Table of Contents
Gaylord National operating expenses do not include credit losses on
(2) held-to-maturity securities of
months and six months ended June 30, 2020 , respectively. See discussion of
this item below.
Gaylord National operating expenses for the three months and six months ended
respectively, in expenses directly related to the COVID-19 pandemic, which (3) are primarily employment costs. Gaylord National operating expenses for the
three months and six months ended
million in credits, which is net of $2.5 million in payroll tax credits
afforded under the CARES Act.
Gaylord Rockies Results. The results of Gaylord Rockies for the three months and
six months ended June 30, 2021 and 2020 are as follows (in thousands, except
percentages and performance metrics):
Three Months Ended Six Months Ended
June 30, 2021 June 30,
% %
2021 2020 Change 2021 2020 Change
Revenues:
Rooms $ 7,019 $ 449 1,463.3 % $ 11,134 $ 16,379 (32.0) %
Food and beverage 6,602 46 14,252.2 % 10,411 32,614 (68.1) %
Other hotel revenue 4,717 1,311 259.8 % 8,763 7,411 18.2 %
Total revenue 18,338 1,806 915.4 % 30,308 56,404 (46.3) %
Operating expenses:
Rooms 2,207 556 296.9 % 4,082 5,399 (24.4) %
Food and beverage 6,008 1,650 264.1 % 10,747 18,598 (42.2) %
Other hotel expenses 7,648 5,173 47.8 % 14,674 15,497 (5.3) %
Management fees, net 133 41 224.4 % 588 2,192 (73.2) %Depreciation and amortization 22,617 22,672 (0.2) % 45,308 45,281 0.1 % Total operating expenses (1) 38,613 30,092 28.3 % 75,399 86,967 (13.3) % Performance metrics: Occupancy 25.7 % 0.8 % 24.9 pts 21.6 % 29.1 % (7.5) pts ADR$ 199.69 $ 394.44 (49.4) %$ 189.92 $ 206.04 (7.8) % RevPAR$ 51.38 $ 3.29 1,461.7 %$ 40.98 $ 59.96 (31.7) % Total RevPAR$ 134.25 $ 13.22 915.5 %
Gaylord Rockies operating expenses for the three months and six months ended
(1)
respectively, in expenses directly related to the COVID-19 pandemic, which
are primarily employment costs.
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Entertainment Segment
Total Segment Results. Due to the COVID-19 pandemic, we temporarily closed our
Entertainment segment assets in mid-March 2020 and reopened in stages in the
summer and fall of 2020 with limited capacity. In May 2021 , all venues returned
to full capacity. The Wildhorse Saloon was again closed subsequent to the
December 2020 downtown Nashville bombing and reopened in April 2021 . The
Entertainment segment financial results for the three months and six months
ended June 30, 2021 and 2020 are not comparable to historical periods. In
addition, the Entertainment segment financial results for the three months and
six months ended June 30, 2021 are not comparable to the three months and six
months ended June 30, 2020 due to the temporary closures, which were directly
related to the COVID-19 pandemic. The following presents the financial results
of our Entertainment segment for the three months and six months ended June 30,
2021 and 2020 (in thousands, except percentages):
Three Months Ended Six Months Ended
June 30, June 30,
% %
2021 2020 Change 2021 2020 Change
Revenues $ 35,173 $ 4,376 703.8 % $ 49,546 $ 31,735 56.1 %
Operating expenses 25,639 13,457 90.5 % 44,330 42,803 3.6 %Depreciation and amortization 3,621 3,402 6.4 %
7,222 6,507 11.0 %
Operating income (loss) (1)(2)
Entertainment segment operating income (loss) does not include preopening
(1) costs of
ended
Entertainment segment operating expenses for the three months and six months
(2) ended
respectively, in expenses directly related to the COVID-19 pandemic, which
are primarily employment costs.
Corporate and Other Segment
Total Segment Results. The following presents the financial results of our
Corporate and Other segment for the three months and six months ended
Three Months Ended Six Months Ended
June 30, June 30,
% %
2021 2020 Change 2021 2020 Change
Operating expenses $ 8,978 $ 7,258 23.7 % $ 16,506 $ 15,394 7.2 %Depreciation and amortization 565 1,021 (44.7) %
1,131 1,492 (24.2) % Operating loss (1)$ (9,543) $ (8,279) (15.3) %$ (17,637) $ (16,886) (4.4) %
Corporate segment operating loss for the three months and six months ended
(1)
respectively, in expenses directly related to the COVID-19 pandemic, which
are primarily employment costs.
Corporate and Other operating expenses consist primarily of costs associated with senior management salaries and benefits, legal, human resources, accounting, pension, information technology, consulting and other administrative costs. Corporate and Other segment operating expenses increased in the three months and six months endedJune 30, 2021 , as compared to the prior year periods, primarily as a result of increased consulting and stock compensation expenses.
Operating Results - Preopening Costs
Preopening costs during the three months and six months endedJune 30, 2021 primarily include costs associated with the Gaylord Palms expansion, which was completed inApril 2021 . Preopening costs during the three months and six months endedJune 30, 2020 primarily include costs associated withOle Red Orlando , which opened inJune 2020 , and the Gaylord Palms expansion. 36
Table of Contents
Operating Results - Gain on Sale of Assets
Gain on sale of assets of during the three months and six months ended
Operating Results - Credit Losses on
Credit losses on held-to-maturity securities of$19.1 million and$25.0 million during the three months and six months endedJune 30, 2020 , respectively, relate to the bonds we received in 2008 related to the Gaylord National construction, which we hold as notes receivable. See further discussion regarding these credit losses in Note 6, "Notes Receivable," to the condensed consolidated financial statements included herein.
Non-Operating Results Affecting Net Loss
General
The following table summarizes the other factors which affected our net loss for the three months and six months endedJune 30, 2021 and 2020 (in thousands, except percentages): Three Months Ended Six Months Ended June 30, June 30, % % 2021 2020 Change 2021 2020 Change Interest expense$ 29,847 $ 30,042 (0.6) %$ 60,643 $ 59,400 2.1 % Interest income 1,451 1,854 (21.7) % 2,821 4,225 (33.2) % Loss on extinguishment of debt - - - % (2,949) - (100.0) % Loss from unconsolidated joint ventures (1,910) (1,820) (4.9) % (3,519) (3,715) 5.3 % Other gains and (losses), net (173) (16,755) 99.0 % 201 (16,560) 101.2 % Provision for income taxes (1,623) (161) (908.1) %
(5,577) (26,960) 79.3 % Interest Expense Interest expense decreased$0.2 million and increased$1.2 million during the three months and six months endedJune 30, 2021 , respectively, as compared to the same periods in 2020. The increase in the six-month period was due primarily to increased principal balances outstanding under our senior notes, partially offset by a decrease in average borrowings outstanding under our revolving credit facility. Cash interest expense increased$0.5 million to$29.3 million in the three months and increased$2.4 million to$59.3 million in the six months endedJune 30, 2021 , as compared to the same periods in 2020. Non-cash interest expense, which includes amortization and write-off of deferred financing costs and is offset by capitalized interest, decreased$0.7 million to$0.6 million in the three months and decreased$1.1 million to$1.3 million in the six months endedJune 30, 2021 , as compared to the same periods in 2020. Our weighted average interest rate on our borrowings, excluding the write-off of deferred financing costs and capitalized interest, but including the impact of interest rate swaps, was 4.3% and 4.2% for the three months endedJune 30, 2021 and 2020, respectively, and 4.5% and 4.4% for the six months endedJune 30 ,
2021 and 2020, respectively. Interest Income
Interest income for the three months and six months endedJune 30, 2021 and 2020 primarily includes amounts earned on the bonds that were received in connection with the development of Gaylord National, which we hold as notes receivable. See Note 6, "Notes Receivable," to the accompanying condensed consolidated financial statements included herein for additional discussion of interest income on
these
bonds.
37
Table of Contents
Loss on Extinguishment of Debt
InFebruary 2021 , we commenced a cash tender offer for any and all outstanding$400 Million 5% Senior Notes at a redemption price of$1,005.00 per$1,000 principal amount. Pursuant to the tender offer,$161.9 million aggregate principal amount of these notes were validly tendered. As a result of our purchase of these tendered notes, and the subsequent redemption of all untendered$400 Million 5% Senior Notes, we recognized a loss on extinguishment of debt of$2.9 million in the six months endedJune 30, 2021 .
Loss from
The loss from unconsolidated joint ventures for the three months and six months
ended
Other Gains and (Losses), net
Other gains and (losses), net for the three months and six months endedJune 30, 2021 represents various miscellaneous items. Other gains and (losses), net for the three months and six months endedJune 30, 2020 includes the forfeiture of a$15.0 million deposit associated with the terminated potential acquisition
of Block 21. Provision for Income Taxes As a REIT, we generally will not be subject to federal corporate income taxes on ordinary taxable income and capital gains income from real estate investments that we distribute to our stockholders. We will continue to be required to pay federal and state corporate income taxes on earnings of our TRSs. For the three months endedJune 30, 2021 and 2020, we recorded an income tax provision of$1.6 million and$0.2 million , respectively. For the six months endedJune 30, 2021 and 2020, we recorded an income tax provision of$5.6 million and$27.0 million , respectively. The income tax provision for the six months endedJune 30, 2021 and 2020 includes the recording of a valuation allowance of$3.6 million and$26.7 million , respectively, as discussed in Note 12, "Income Taxes," to the condensed consolidated financial statements included herein. In the six months endedJune 30, 2021 and 2020, we also recorded an income tax provision of$2.0 million and$0.2 million , respectively, inclusive of valuation allowance, related to current period operations.
Non-GAAP Financial Measures
We present the following non-GAAP financial measures, which we believe are useful to investors as key measures of our operating performance:
EBITDAre, Adjusted EBITDAre and Adjusted EBITDAre, Excluding Noncontrolling Interest in Consolidated Joint Venture Interest Definition
We calculate EBITDAre, which is defined by theNational Association of Real Estate Investment Trusts ("NAREIT") in itsSeptember 2017 white paper as net income (calculated in accordance with GAAP) plus interest expense, income tax expense, depreciation and amortization, gains or losses on the disposition of depreciated property (including gains or losses on change in control), impairment write-downs of depreciated property and of investments in unconsolidated affiliates caused by a decrease in the value of depreciated property or the affiliate, and adjustments to reflect the entity's share of EBITDAre of unconsolidated affiliates.
Adjusted EBITDAre is then calculated as EBITDAre, plus to the extent the following adjustments occurred during the periods presented:
? Preopening costs; ? Non-cash lease expense;
? Equity-based compensation expense;
? Impairment charges that do not meet the NAREIT definition above;
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? Credit losses on held-to-maturity securities;
? Any transactions costs of acquisitions;
? Loss on extinguishment of debt;
? Pension settlement charges;
? Pro rata adjusted EBITDAre from unconsolidated joint ventures; and
? Any other adjustments we have identified herein.
We then exclude the pro rata share of Adjusted EBITDAre related to noncontrolling interests in consolidated joint ventures to calculate Adjusted EBITDAre, Excluding Noncontrolling Interest in Consolidated Joint Venture.
We use EBITDAre, Adjusted EBITDAre and Adjusted EBITDAre, Excluding Noncontrolling Interest in Consolidated Joint Venture to evaluate our operating performance. We believe that the presentation of these non-GAAP financial measures provides useful information to investors regarding our operating performance and debt leverage metrics, and that the presentation of these non-GAAP financial measures, when combined with the primary GAAP presentation of net income, is beneficial to an investor's complete understanding of our operating performance. We make additional adjustments to EBITDAre when evaluating our performance because we believe that presenting Adjusted EBITDAre and Adjusted EBITDAre, Excluding Noncontrolling Interest in Consolidated Joint Venture provides useful information to investors regarding our operating performance and debt leverage metrics.
FFO, Adjusted FFO, and Adjusted FFO available to common shareholders and unit holders Definition
We calculate FFO, which definition is clarified by NAREIT in itsDecember 2018 white paper as net income (calculated in accordance with GAAP) excluding depreciation and amortization (excluding amortization of deferred financing costs and debt discounts), gains and losses from the sale of certain real estate assets, gains and losses from a change in control, impairment write-downs of certain real estate assets and investments in entities when the impairment is directly attributable to decreases in the value of depreciated real estate held by the entity, income (loss) from consolidated joint ventures attributable to noncontrolling interest, and pro rata adjustments for unconsolidated joint ventures.
To calculate Adjusted FFO available to common shareholders and unit holders, we then exclude, to the extent the following adjustments occurred during the periods presented:
? Right-of-use asset amortization;
? Impairment charges that do not meet the NAREIT definition above;
? Write-offs of deferred financing costs;
? Amortization of debt discounts or premiums and amortization of deferred
financing costs;
? Loss on extinguishment of debt;
? Non-cash lease expense;
? Credit loss on held-to-maturity securities;
? Pension settlement charges;
? Additional pro rata adjustments from unconsolidated joint ventures;
? (Gains) losses on other assets;
? Transactions costs on acquisitions;
? Deferred income tax expense (benefit); and
? Any other adjustments we have identified herein.
FFO available to common shareholders and unit holders and Adjusted FFO available to common shareholders and unit holders exclude the ownership portion of the Gaylord Rockies joint venture not controlled or owned by the Company.
Beginning in the third quarter of 2020, we refer to unitholders in these measures, reflecting outstanding OP units issued to noncontrolling interests for the first time during third quarter 2020.
We believe that the presentation of FFO available to common shareholders and
unit holders and Adjusted FFO available to common shareholders and unit holders
provides useful information to investors regarding the performance of our
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ongoing operations because they are a measure of our operations without regard to specified non-cash items such as real estate depreciation and amortization, gain or loss on sale of assets and certain other items, which we believe are not indicative of the performance of our underlying hotel properties. We believe that these items are more representative of our asset base than our ongoing operations. We also use these non-GAAP financial measures as measures in determining our results after considering the impact of our capital structure. We caution investors that amounts presented in accordance with our definitions of Adjusted EBITDAre, Adjusted EBITDAre, Excluding Noncontrolling Interest, FFO available to common shareholders and unit holders, and Adjusted FFO available to common shareholders and unit holders may not be comparable to similar measures disclosed by other companies, because not all companies calculate these non-GAAP measures in the same manner. These non-GAAP financial measures, and any related per share measures, should not be considered as alternative measures of our Net Income (Loss), operating performance, cash flow or liquidity. These non-GAAP financial measures may include funds that may not be available for our discretionary use due to functional requirements to conserve funds for capital expenditures and property acquisitions and other commitments and uncertainties. Although we believe that these non-GAAP financial measures can enhance an investor's understanding of our results of operations, these non-GAAP financial measures, when viewed individually, are not necessarily better indicators of any trend as compared to GAAP measures such as Net Income (Loss), Operating Income (Loss), or cash flow from operations. The following is a reconciliation of our consolidated GAAP net loss to EBITDAre and Adjusted EBITDAre for the three months and six months endedJune 30, 2021 and 2020 (in thousands): Three Months Ended Six Months Ended June 30, 2021 June 30, 2021 2020 2021 2020 Net loss$ (63,049) $ (187,659) $ (180,170) $ (238,395) Interest expense, net 28,396 28,188 57,822 55,175 Provision for income taxes 1,623 161 5,577 26,960
Depreciation and amortization 54,673 54,011 107,988 107,356 (Gain) loss on sale of assets - 6 (317) (1,255) Pro rata EBITDAre from unconsolidated joint ventures 19 6 34 9 EBITDAre 21,662 (105,287) (9,066) (50,150) Preopening costs 217 700 616 1,501 Non-cash lease expense 1,085 1,141 2,173 2,258
Equity-based compensation expense 3,146 2,189 5,668 4,419 Pension settlement charge 566 - 566 - Credit loss on held-to-maturity securities - 19,145 - 24,973 Interest income on Gaylord National bonds 1,404 1,733 2,725 3,198 Loss on extinguishment of debt - - 2,949 - Transaction costs of acquisitions 75 15,138 75 15,435 Adjusted EBITDAre 28,155 (65,241) 5,706 1,634 Adjusted EBITDAre of noncontrolling interest in consolidated joint venture 273 2,128 1,017 (5,578) Adjusted EBITDAre, excluding noncontrolling interest in consolidated joint venture$ 28,428 $ (63,113) $
6,723 $ (3,944)
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The following is a reconciliation of our consolidated GAAP net loss to FFO and Adjusted FFO for the three months and six months endedJune 30, 2021 and 2020 (in thousands): Three Months Ended Six Months Ended June 30, 2021 June 30, 2021 2020 2021 2020 Net loss$ (63,049) $ (187,659) $ (180,170) $ (238,395) Noncontrolling interest in consolidated joint venture 4,708 14,167 16,501 18,387 Net loss available to common shareholders and unit holders (58,341) (173,492) (163,669) (220,008) Depreciation and amortization 54,636 53,974 107,914 107,282 Adjustments for noncontrolling interest (3,139) (8,581) (11,069) (17,138) Pro rata adjustments from joint ventures 19 6 34 11 FFO available to common shareholders and unit holders (6,825) (128,093) (66,790) (129,853) Right-of-use asset amortization 37 37
74 74
Non-cash lease expense 1,085 1,141 2,173 2,258
Pension settlement charge 566 - 566 -Credit loss on held-to-maturity securities - 19,145 - 24,973 Gain on other assets - - (317) (1,261) Write-off of deferred financing costs - 235 - 235 Amortization of deferred financing costs 2,170 1,957 4,379 3,851 Amortization of debt premiums (70) (67) (140) (134) Loss on extinguishment of debt - - 2,949 - Adjustments for noncontrolling interest (77) (277) (294) (491) Transaction costs of acquisitions 75 15,138 75 15,435 Deferred tax expense 1,392 82 5,173 26,641 Adjusted FFO available to common shareholders and unit holders$ (1,647) $ (90,702) $ (52,152) $ (58,272)
Liquidity and Capital Resources
Cash Flows From Operating Activities. Cash flow from operating activities is the principal source of cash used to fund our operating expenses, interest payments on debt, maintenance capital expenditures, and dividends to stockholders. During the six months endedJune 30, 2021 , with most of our hotels and other assets operating at limited capacity for at least a portion of the period, our net cash flows used in operating activities were$27.9 million , primarily reflecting cash used in our net loss before depreciation expense, amortization expense and other non-cash charges of$53.4 million , partially offset by favorable changes in working capital of$25.5 million . The favorable changes in working capital primarily resulted from an increase in deferred revenues associated with advanced room deposits at ourGaylord Hotels properties and advanced ticket purchases at our Entertainment segment venues, partially offset by an increase in accounts receivable due to an increase in group business at ourGaylord Hotels properties. During the six months endedJune 30, 2020 , our net cash flows used in operating activities were$110.8 million , primarily reflecting cash used in our net loss before depreciation expense, amortization expense and other non-cash charges of$52.2 million and unfavorable changes in working capital of$58.6 million . The unfavorable changes in working capital primarily resulted from a decrease in accounts payable and accrued liabilities associated with the payment of accrued property taxes and incentive compensation, partially offset by a decrease in accounts receivable due to the collection of previous receivables and the decrease of new receivables due to property closures. Cash Flows From Investing Activities. During the six months endedJune 30, 2021 , our primary use of funds for investing activities was the$210.0 million purchase of the remaining 35% interest in the Gaylord Rockies joint venture and adjacent, undeveloped land. In addition, we spent$53.5 million for purchases of property and equipment, which consisted primarily of the expansion ofGaylord Palms , a rooms renovation at Gaylord National, and ongoing maintenance capital expenditures for our existing properties. 41
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During the six months endedJune 30, 2020 , our primary uses of funds for investing activities were purchases of property and equipment, which totaled$83.1 million , and consisted primarily of the expansion at Gaylord Palms and ongoing maintenance capital expenditures for our existing properties. Cash Flows From Financing Activities. Our cash flows from financing activities primarily reflect the incurrence of debt, the repayment of long-term debt and, during the six months endedJune 30, 2020 , the payment of cash dividends. During the six months endedJune 30, 2021 , our net cash flows provided by financing activities were$299.4 million , primarily reflecting net senior note borrowing of$200.0 million and net borrowings under our credit facility of$116.5 million , partially offset by the payment of$10.6 million in deferred financing costs. During the six months endedJune 30, 2020 , our net cash flows used in financing activities were$84.1 million , primarily reflecting the payment of$102.3 in cash dividends, partially offset by$25.0 million in borrowings under our revolving credit agreement.
Liquidity
AtJune 30, 2021 , we had$71.6 million in unrestricted cash and$474.7 million available for borrowing under our revolving credit facility. During the six months endedJune 30, 2021 , we borrowed$119.0 million under our revolving credit facility, tendered for and redeemed$400.0 million in aggregate principal amount of senior notes, issued$600.0 million in aggregate principal amount of new senior notes, purchased the remaining 35% of the Gaylord Rockies joint venture that we did not previously own and undeveloped land adjacent to Gaylord Rockies for approximately$210.0 million , and incurred capital expenditures of$53.5 million . These net inflows, partially offset by cash flows used in operations discussed above, were the primary factors in the slight increase in our cash balance fromDecember 31, 2020 toJune 30, 2021 .
We anticipate investing in our operations during the remainder of 2021 by
spending between
We believe that our cash on hand, together with amounts available for borrowing under our revolving credit facility, will be adequate to fund our general short-term commitments, as well as: (i) current operating expenses, (ii) interest expense on long-term debt obligations, and (iii) financing lease and operating lease obligations until our assets are operating at pre-COVID-19 pandemic levels. Our ability to draw on our credit facility is subject to the satisfaction of provisions of the credit facility, as amended. Our cash burn has continued to improve during 2021, and we achieved positive cash flow inJune 2021 . OnMay 27, 2021 , we entered into an at-the-market ("ATM") equity distribution agreement (the "ATM Agreement") with a consortium of banks (each a "Sales Agent" and collectively, the "Sales Agents"), pursuant to which we may offer and sell to or through our Sales Agents (the "ATM Offering"), from time to time, up to 4.0 million shares of our common stock in such share amounts as we may specify by notice to the Sales Agents, in accordance with the terms and conditions set forth in the ATM Agreement. We intend to use the net proceeds from any sale of shares under the ATM Agreement for the repayment of outstanding indebtedness, which may include the repayment of amounts outstanding under our credit agreement governing our revolving credit facility. Net proceeds which are not used for the repayment of outstanding indebtedness (to the extent then permitted by our credit agreement) may be used for general corporate purposes. No shares were issued under the ATM Agreement during the three months and six months endedJune 30, 2021 . Our outstanding principal debt agreements are described below. AtJune 30, 2021 , there were no defaults under the covenants related to our outstanding debt based on the amended terms reached with the lenders inDecember 2020 .
Principal Debt Agreements
Credit Facility. OnOctober 31, 2019 , we entered into a Sixth Amended and Restated Credit Agreement (the "Credit Agreement") among the Company, as a guarantor, theOperating Partnership , as borrower, certain other subsidiaries of the Company party thereto, as guarantors, certain subsidiaries of the Company party thereto, as pledgors, the lenders party thereto andWells Fargo Bank, National Association , as administrative agent, which amended and restated the Company's existing credit facility. As amended, our credit facility consists of a$700.0 million senior secured revolving 42
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credit facility (the "Revolver"), a$300.0 million senior secured term loan A (the "Term Loan A"), and a$500.0 million senior secured term loan B (the "Term Loan B"), each as discussed below. In 2020, we entered into two amendments (the "Amendments") to the Credit Agreement among the same parties, as discussed below. Each of the Revolver, Term Loan A and Term Loan B is guaranteed by us, each of our subsidiaries that own theGaylord Hotels properties, other than Gaylord Rockies, and certain of our other subsidiaries. Each is secured by (i) a first mortgage lien on the real property of each of ourGaylord Hotels properties, excluding Gaylord Rockies, (ii) pledges of equity interests in our subsidiaries that own theGaylord Hotels properties, excluding Gaylord Rockies, (iii) pledges of equity interests in theOperating Partnership , our subsidiaries that guarantee the Credit Agreement, and certain other of our subsidiaries, (iv) our personal property and the personal property of theOperating Partnership and our guarantor subsidiaries and (v) all proceeds and products from ourGaylord Hotels properties, excluding Gaylord Rockies. Advances are subject to a 55% borrowing base, based on the appraisal value of theGaylord Hotels properties (reduced to 50% in the event one of theGaylord Hotels properties is sold), excluding Gaylord Rockies. Assets of Gaylord Rockies are not subject to the liens of our credit facility. Each of the Revolver, Term Loan A and Term Loan B contains certain covenants which, among other things, limit the incurrence of additional indebtedness, investments, dividends, transactions with affiliates, asset sales, acquisitions, mergers and consolidations, liens and encumbrances and other matters customarily restricted in such agreements. The material financial covenants, ratios or tests contained in the Credit Agreement are as follows:
? We must maintain a consolidated funded indebtedness to total asset value ratio
as of the end of each calendar quarter of not more than .65 to 1.0.
? We must maintain a consolidated fixed charge coverage ratio (as defined in the
Credit Agreement) of not less than 1.50 to 1.00.
We must maintain an implied debt service coverage ratio (the ratio of adjusted
? net operating income to monthly principal and interest that would be required
if the outstanding balance were amortized over 25 years at an assumed fixed
rate) of not less than 1.60 to 1.00.
The Amendments provide for a waiver of the foregoing financial covenants throughMarch 31, 2022 (the "Temporary Waiver Period"). In addition, the Amendments contain a covenant that we must maintain unrestricted liquidity (in the form of unrestricted cash on hand or undrawn availability under the Revolver) of at least$100 million . In the event we are unable to comply with the Credit Agreement's financial covenants, we expect to further amend the Credit Agreement or take other mitigating actions prior to a potential breach. We may elect to terminate the Temporary Waiver Period prior to expiration. For the first quarter following the expiration or termination of the Temporary Waiver Period, we will calculate compliance with the financial covenants in the Credit Agreement using a designated annualized calculation based on our most recently completed fiscal quarter. Thereafter, we will be required to satisfy financial covenants at the levels set forth in the Credit Agreement using a designated annualized calculation based on our most recently completed fiscal quarters, as applicable. Pursuant to the Amendment, we are required to use any proceeds from borrowings drawn during the Temporary Waiver Period and until we demonstrate financial covenant compliance following the expiration or earlier termination of the Temporary Waiver Period (the "Restricted Period") to fund operating expenses, debt service of the Company and its subsidiaries, and permitted capital expenditures and investments. If an event of default shall occur and be continuing under the Credit Agreement, the commitments under the Credit Agreement may be terminated, and the principal amount outstanding under the Credit Agreement, together with all accrued unpaid interest and other amounts owing in respect thereof, may be declared immediately due and payable. Revolving Credit Facility. Pursuant to the Credit Agreement, we extended the maturity date of the Revolver toMarch 31, 2024 , with two additional six-month extension options, at our election. Borrowings under the Revolver bear interest at an annual rate equal to, at our option, either (i) LIBOR plus the applicable margin ranging from 1.40% to 1.95%, dependent upon our funded debt to total asset value ratio (as defined in the Credit Agreement) or (ii) a base rate as set forth in the Credit Agreement. Pursuant to the Amendments, beginningApril 1, 2021 through the end of the Restricted 43
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Period, the interest rate on LIBOR-based borrowings under the Revolver will be LIBOR plus 2.25%. Principal is payable in full at maturity.
AtJune 30, 2021 ,$225.0 million was outstanding under the Revolver, and the lending banks had issued$0.3 million of letters of credit under the Credit Agreement, which left$474.7 million of availability under the Revolver (subject to the satisfaction of debt incurrence tests under the indentures governing our$600 Million 4.5% Senior Notes and our$700 million in aggregate principal amount of senior notes due 2027 (the "$700 Million 4.75% Senior Notes"), which we met atJune 30, 2021 ). Term Loan A Facility. Pursuant to the Credit Agreement, in 2019 the Term Loan A was increased from$200 million to$300 million and the maturity date was extended toMarch 31, 2025 . Borrowings bear interest at an annual rate equal to, at our option, either (i) LIBOR plus the applicable margin ranging from 1.35% to 1.90%, dependent upon our funded debt to total asset value ratio (as defined in the Credit Agreement) or (ii) a base rate as set forth in the Credit Agreement. Pursuant to the Amendments, beginningApril 1, 2021 through the end of the Restricted Period, the interest rate on LIBOR-based borrowings under the Term Loan A will be LIBOR plus 2.25%. Amounts borrowed under the Term Loan A that are repaid or prepaid may not be reborrowed. Term Loan B Facility. The Term Loan B has a maturity date ofMay 11, 2024 . The applicable interest rate margins for borrowings under the Term Loan B are, at our option, either (i) LIBOR plus 2.00% or (ii) a base rate as set forth in the Credit Agreement. AtJune 30, 2021 , the interest rate on the Term Loan B was LIBOR plus 2.00%. InOctober 2019 , we entered into four interest rate swaps with a total notional amount of$350.0 million to fix the LIBOR portion of the interest rate, at rates between 1.2235% and 1.2315%, throughMay 11, 2023 . We have designated these interest rate swaps as effective cash flow hedges. The Term Loan B amortizes in equal quarterly installments in aggregate annual amounts equal to 1.0% of the original principal amount of$500.0 million , with the balance due at maturity. In addition, if for any fiscal year, there is Excess Cash Flow (as defined in the Credit Agreement), an additional principal amount is required. Amounts borrowed under the Term Loan B that are repaid or prepaid may not be reborrowed. AtJune 30, 2021 ,$378.8 million in borrowings were outstanding under the Term Loan B.$700 Million 4.75% Senior Notes. InSeptember 2019 , theOperating Partnership and Finco completed the private placement of$500.0 million in aggregate principal amount of senior notes due 2027, which are guaranteed by the Company and its subsidiaries that guarantee the Credit Agreement. The$500 Million 4.75% Senior Notes and guarantees were issued pursuant to an indenture by and among the issuing subsidiaries and the guarantors andU.S. Bank National Association as trustee. The$500 Million 4.75% Senior Notes have a maturity date ofOctober 15, 2027 and bear interest at 4.75% per annum, payable semi-annually in cash in arrears onApril 15 andOctober 15 of each year. The$500 Million 4.75% Senior Notes are general unsecured and unsubordinated obligations of the issuing subsidiaries and rank equal in right of payment with such subsidiaries' existing and future senior unsecured indebtedness, including the$400 Million 5% Senior Notes, and senior in right of payment to future subordinated indebtedness, if any. The$500 Million 4.75% Senior Notes are effectively subordinated to the issuing subsidiaries' secured indebtedness to the extent of the value of the assets securing such indebtedness. The guarantees rank equally in right of payment with the applicable guarantor's existing and future senior unsecured indebtedness and senior in right of payment to any future subordinated indebtedness of such guarantor. The$500 Million 4.75% Senior Notes are effectively subordinated to any secured indebtedness of any guarantor to the extent of the value of the assets securing such indebtedness and structurally subordinated to all indebtedness and other obligations of theOperating Partnership's subsidiaries that do not guarantee the$500 Million 4.75% Senior Notes. InOctober 2019 , we completed a tack-on private placement of$200.0 million in aggregate principal amount of 4.75% senior notes due 2027 (the "additional 2027 notes") at an issue price of 101.250% of their aggregate principal amount plus accrued interest from theSeptember 19, 2019 issue date for the$500 Million 4.75% Senior Notes. The additional 2027 notes and the$500 Million 4.75% Senior Notes constitute a single class of securities (collectively, the "$700 Million 4.75% Senior Notes"). All other terms and conditions of the additional 2027 notes are identical to the$500 Million 4.75% Senior Notes. The$700 Million 4.75% Senior Notes are redeemable beforeOctober 15, 2022 , in whole or in part, at 100.00%, plus accrued and unpaid interest thereon to, but not including, the redemption date, plus a make-whole premium. The$700 Million 4.75% Senior Notes will be redeemable, in whole or in part, at any time on
or afterOctober 15, 2022 at a 44 Table of Contents
redemption price expressed as a percentage of the principal amount thereof,
which percentage is 103.563%, 102.375%, 101.188%, and 100.00% beginning on
We completed a registered offer to exchange the
$600 Million 4.50% Senior Notes. OnFebruary 17, 2021 , theOperating Partnership and Finco completed the private placement of$600.0 million in aggregate principal amount of 4.50% senior notes due 2029, which are guaranteed by the Company and its subsidiaries that guarantee the Credit Agreement. The$600 Million 4.50% Senior Notes and guarantees were issued pursuant to an indenture by and among the issuing subsidiaries and the guarantors andU.S. Bank National Association as trustee. The$600 Million 5% Senior Notes have a maturity date ofFebruary 15, 2029 and bear interest at 4.50% per annum, payable semi-annually in cash in arrears onFebruary 15 andAugust 15 each year, beginning onAugust 15, 2021 . The$600 Million 4.50% Senior Notes are general unsecured and unsubordinated obligations of the issuing subsidiaries and rank equal in right of payment with such subsidiaries' existing and future senior unsecured indebtedness, including the$700 Million 4.75% Senior Notes, and senior in right of payment to future subordinated indebtedness, if any. The$600 Million 4.50% Senior Notes are effectively subordinated to the issuing subsidiaries' secured indebtedness to the extent of the value of the assets securing such indebtedness. The guarantees rank equally in right of payment with the applicable guarantor's existing and future senior unsecured indebtedness and senior in right of payment to any future subordinated indebtedness of such guarantor. The$600 Million 4.50% Senior Notes are effectively subordinated to any secured indebtedness of any guarantor to the extent of the value of the assets securing such indebtedness and structurally subordinated to all indebtedness and other obligations of theOperating Partnership's subsidiaries that do not guarantee the$600 Million 4.50% Senior Notes. The net proceeds from the issuance of the$600 Million 4.50% Senior Notes totaled approximately$591 million , after deducting the initial purchasers' discounts, commissions and offering expenses. We used a significant portion of these proceeds to tender and redeem our previous$400 Million 5% Senior Notes, as discussed below, and to repay all of the amounts outstanding under the Revolver and for general corporate purposes. The$600 Million 4.50% Senior Notes are redeemable beforeFebruary 15, 2024 , in whole or in part, at 100.00%, plus accrued and unpaid interest thereon to, but not including, the redemption date, plus a make-whole premium. The$600 Million 4.50% Senior Notes will be redeemable, in whole or in part, at any time on or afterFebruary 15, 2024 at a redemption price expressed as a percentage of the principal amount thereof, which percentage is 102.250%, 101.500%, 100.750%, and 100.000% beginning onFebruary 15 of 2024, 2025, 2026, and 2027, respectively, plus accrued and unpaid interest thereon to, but not including, the redemption date.
Tender for and Redemption of
OnFebruary 9, 2021 , we commenced a cash tender offer for any and all outstanding$400 Million 5% Senior Notes at a redemption price of$1,005.00 per$1,000 principal amount. Pursuant to the tender offer,$161.9 million aggregate principal amount of the$400 Million 5% Senior Notes were validly tendered. We used a portion of the proceeds from the issuance of the$600 Million 4.50% Senior Notes to fund the tender offer. In accordance with the indenture governing the$400 Million 5% Senior Notes, subsequent to the expiration of the tender offer, onFebruary 17, 2021 , we gave irrevocable notice of the redemption of all remaining$400 Million 5% Senior Notes not tendered in the tender offer and irrevocably deposited with the trustee for the$400 Million 5% Senior Notes an amount sufficient to pay the redemption price of the$400 Million 5% Senior Notes called for redemption at that date, including interest throughApril 15, 2021 . The redemption and cancellation of the$400 Million 5% Senior Notes was completed onApril 15, 2021 . We used a portion of the proceeds from the issuance of the$600 Million 4.50% Senior Notes to fund the redemption.$800 Million Term Loan (Gaylord Rockies). OnJuly 2, 2019 ,Aurora Convention Center Hotel, LLC ("Hotel Owner ") andAurora Convention Center Hotel Lessee, LLC ("Tenant" and collectively, withHotel Owner , the "Loan Parties"), subsidiaries of the entities that comprised the Gaylord Rockies joint venture, entered into a Second Amended and Restated Loan Agreement (the "Gaylord Rockies Loan") withWells Fargo Bank, National Association , as administrative agent, which refinanced the Gaylord Rockies joint venture's existing$500 million construction loan and 45 Table of Contents$39 million mezzanine loan, which were scheduled to mature inDecember 2019 . The Gaylord Rockies Loan consists of an$800.0 million secured term loan facility and also includes the option for an additional$80.0 million of borrowing capacity should we pursue an expansion of Gaylord Rockies, which was announced inFebruary 2020 but has been postponed as a result of the COVID-19 pandemic. The Gaylord Rockies Loan maturesJuly 2, 2023 with three, one-year extension options, subject to certain requirements in the Gaylord Rockies Loan, and bears interest at LIBOR plus 2.50%. Simultaneous with closing, the Gaylord Rockies joint venture entered into an interest rate swap to fix the LIBOR portion of the interest rate at 1.65% for the first three years of the loan. We have designated this interest rate swap as an effective cash flow hedge. The Gaylord Rockies Loan is secured by a deed of trust lien on the Gaylord Rockies real estate and related assets. We have entered into limited repayment and carry guaranties that, in the aggregate, guarantee repayment of 10% of the principal debt, together with interest and operating expenses, which are to be released once Gaylord Rockies achieves a certain debt service coverage threshold as defined in the Gaylord Rockies Loan. Generally, the Gaylord Rockies Loan is non-recourse to the Company, subject to (i) those limited guaranties, (ii) a completion guaranty in the event the expansion is pursued, and (iii) customary non-recourse carve-outs.
OnJune 30, 2020 , the Loan Parties entered into Amendment No. 1 (the "Loan Amendment") to the Gaylord Rockies Loan, by and among the Loan Parties,Wells Fargo Bank, National Association , as administrative agent, and the lenders
from time to time party thereto.
The Loan Amendment modified the Gaylord Rockies Loan to (i) provide for the ability to use cash for certain purposes, even during a Cash Sweep Period (as defined in the Loan Agreement), which the Gaylord Rockies joint venture was in beginning inJuly 2020 , (ii) extend the deadline forHotel Owner to commence construction of an expansion to Gaylord Rockies, and (iii) provide favorable changes to the debt service coverage ratio provisions. The Loan Amendment includes restrictions on distributions to our subsidiaries that own Gaylord Rockies and requires a certain level of equity financing for a Gaylord Rockies expansion. Additional Debt Limitations. Pursuant to the terms of the management agreements and pooling agreement with Marriott for ourGaylord Hotels properties, excluding Gaylord Rockies, we are subject to certain debt limitations described below.
The management agreements provide for the following limitations on indebtedness encumbering a hotel:
The aggregate principal balance of all mortgage and mezzanine debt encumbering
? the hotel shall be no greater than 75% of the fair market value of the hotel;
and
The ratio of (a) aggregate Operating Profit (as defined in the management
? agreement) in the 12 months prior to the closing on the mortgage or mezzanine
debt to (b) annual debt service for the hotel shall equal or exceed 1.2:1; but
is subject to the pooling agreement described below.
The pooled limitations on Secured Debt (as defined in the pooling agreement) are as follows:
The aggregate principal balance of all mortgage and mezzanine debt on Pooled
? Hotels (as defined in the pooling agreement), shall be no more than 75% of the
fair market value of
The ratio of (a) aggregate Operating Profit (as defined in the pooling
? agreement) of
or mezzanine debt to (b) annual debt service for the
or exceed 1.2:1.
Gaylord Rockies is not a Pooled Hotel for this purpose.
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Estimated Interest on Principal Debt Agreements
Based on the stated interest rates on our fixed-rate debt and the rates in effect atJune 30, 2021 for our variable-rate debt after considering interest rate swaps, our estimated interest obligations through 2025 are$399.9 million . These estimated obligations are$59.2 million for the remainder of 2021,$115.2 million in 2022,$90.0 million in 2023,$72.1 million in 2024, and$63.4 million in 2025. Variable rates, as well as outstanding principal balances, could change in future periods. See "Principal Debt Agreements" above for a discussion of our outstanding long-term debt. See "Supplemental Cash Flow Information" in Note 1 to the consolidated financial statements included in our Annual Report on Form 10-K for the year endedDecember 31, 2020 for a discussion of the interest we paid during 2020, 2019 and 2018.
Supplemental Guarantor Financial Information
The Company's$600 Million 4.50% Senior Notes and$700 Million 4.75% Senior Notes were each issued by theOperating Partnership andRHP Finance Corporation , aDelaware corporation (collectively, the "Issuers"), and are guaranteed on a senior unsecured basis by the Company (as the parent company), each of theOperating Partnership's subsidiaries that own theGaylord Hotels properties, excluding Gaylord Rockies, and certain other of the Company's subsidiaries, each of which also guarantees theOperating Partnership's Credit Agreement, as amended (such subsidiary guarantors, together with the Company, the "Guarantors"). The Guarantors are 100% owned by theOperating Partnership or the Company, and the guarantees are full and unconditional and joint and several. The guarantees rank equally in right of payment with each Guarantor's existing and future senior unsecured indebtedness and senior in right of payment to all future subordinated indebtedness, if any, of such Guarantor. Not all of the Company's subsidiaries have guaranteed the Company's$600 Million 4.50% Senior Notes and$700 Million 4.75% Senior Notes, and the guarantees are structurally subordinated to all indebtedness and other obligations of such subsidiaries that have not guaranteed the Company's$600 Million 4.50% Senior Notes and$700 Million 4.75% Senior Notes. The following tables present summarized financial information for the Issuers and the Guarantors on a combined basis. The intercompany balances and transactions between these parties, as well as any investments in or equity in earnings from non-guarantor subsidiaries, have been eliminated (amounts in
thousands).
June 30 , December 31,
2021 2020
Net receivables due from non-guarantor subsidiaries
138,241 Other assets 1,638,293 1,660,137 Total assets$ 2,163,776 $ 1,798,378 Total liabilities$ 2,320,765 $ 1,995,509 Total noncontrolling interest$ 12,201 $ 14,516 Six Months Ended June 30, 2021 Revenues from third-parties $ 256 Revenues from non-guarantor subsidiaries
56,555
Operating expenses (excluding expenses to non-guarantor subsidiaries)
56,593
Expenses to non-guarantor subsidiaries
5,737 Operating loss (5,519) Net loss (45,090) Net loss available to common stockholders (43,861)
Critical Accounting Policies and Estimates
We prepare our condensed consolidated financial statements in conformity with accounting principles generally accepted inthe United States . Certain of our accounting policies, including those related to revenue recognition, impairment of long-lived and other assets, credit losses on financial assets, stock-based compensation, derivative financial instruments, depreciation and amortization, income taxes, pension plans, acquisitions and purchase price allocations, and legal contingencies, require that we apply significant judgment in defining the appropriate assumptions for calculating 47
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financial estimates. By their nature, these judgments are subject to an inherent degree of uncertainty. Our judgments are based on our historical experience, our observance of trends in the industry, and information available from other outside sources, as appropriate. There can be no assurance that actual results will not differ from our estimates. For a discussion of our critical accounting policies and estimates, please refer to Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Notes to Consolidated Financial Statements" presented in our Annual Report on Form 10-K for the year endedDecember 31, 2020 . There were no newly identified critical accounting policies in the first six months of 2021, nor were there any material changes to the critical accounting policies and estimates discussed in our Annual Report on Form 10-K for the year endedDecember 31, 2020 .
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