SUNSTONE HOTEL INVESTORS, INC., 10-Q filed on 8/4/2023
Quarterly Report
v3.23.2
Document and Entity Information - shares
 6 Months Ended
Jun. 30, 2023
Aug. 01, 2023
Document Information [Line Items]    
Document Type 10-Q  
Document Quarterly Report true  
Document Period End Date Jun. 30, 2023  
Document Transition Report false  
Entity File Number 001-32319  
Entity Registrant Name Sunstone Hotel Investors, Inc.  
Entity Incorporation, State or Country Code MD  
Entity Tax Identification Number 20-1296886  
Entity Address, Address Line One 15 Enterprise, Suite 200  
Entity Address, City or Town Aliso Viejo  
Entity Address, State or Province CA  
Entity Address, Postal Zip Code 92656  
City Area Code 949  
Local Phone Number 330-4000  
Entity Current Reporting Status Yes  
Entity Interactive Data Current Yes  
Entity Filer Category Large Accelerated Filer  
Entity Small Business false  
Entity Emerging Growth Company false  
Entity Shell Company false  
Entity Common Stock, Shares Outstanding   207,184,691
Entity Central Index Key 0001295810  
Current Fiscal Year End Date --12-31  
Document Fiscal Year Focus 2023  
Document Fiscal Period Focus Q2  
Amendment Flag false  
Common Stock    
Document Information [Line Items]    
Title of 12(b) Security Common Stock, $0.01 par value  
Trading Symbol SHO  
Security Exchange Name NYSE  
Series H Cumulative Redeemable Preferred Stock    
Document Information [Line Items]    
Title of 12(b) Security Series H Cumulative Redeemable Preferred Stock, $0.01 par value  
Trading Symbol SHO.PRH  
Security Exchange Name NYSE  
Series I Cumulative Redeemable Preferred Stock    
Document Information [Line Items]    
Title of 12(b) Security Series I Cumulative Redeemable Preferred Stock, $0.01 par value  
Trading Symbol SHO.PRI  
Security Exchange Name NYSE  
v3.23.2
CONSOLIDATED BALANCE SHEETS - USD ($)
$ in Thousands
Jun. 30, 2023
Dec. 31, 2022
Current assets:    
Cash and cash equivalents $ 107,846 $ 101,223
Restricted cash 55,668 55,983
Accounts receivable, net 48,043 42,092
Prepaid expenses and other current assets 15,268 14,668
Total current assets 226,825 213,966
Investment in hotel properties, net 2,830,739 2,840,928
Operating lease right-of-use assets, net 14,999 15,025
Deferred financing costs, net 4,329 5,031
Other assets, net 9,319 7,867
Total assets 3,086,211 3,082,817
Current liabilities:    
Accounts payable and accrued expenses 44,972 56,849
Accrued payroll and employee benefits 18,501 22,801
Dividends and distributions payable 14,891 13,995
Other current liabilities 66,481 65,213
Current portion of notes payable, net 2,065 222,030
Total current liabilities 146,910 380,888
Notes payable, less current portion, net 812,766 590,651
Operating lease obligations, less current portion 14,267 14,360
Other liabilities 11,144 11,957
Total liabilities 985,087 997,856
Commitments and contingencies (Note 11)
Stockholders' equity:    
Common stock, $0.01 par value, 500,000,000 shares authorized, 207,184,691 shares issued and outstanding at June 30, 2023 and 209,320,447 shares issued and outstanding at December 31, 2022 2,072 2,093
Additional paid in capital 2,446,047 2,465,595
Retained earnings 1,099,518 1,035,353
Cumulative dividends and distributions (1,727,763) (1,699,330)
Total stockholders' equity 2,101,124 2,084,961
Total equity 2,101,124 2,084,961
Total liabilities and stockholders' equity 3,086,211 3,082,817
Series G Cumulative Redeemable Preferred Stock    
Stockholders' equity:    
Cumulative Redeemable Preferred Stock 66,250 66,250
Series H Cumulative Redeemable Preferred Stock    
Stockholders' equity:    
Cumulative Redeemable Preferred Stock 115,000 115,000
Series I Cumulative Redeemable Preferred Stock    
Stockholders' equity:    
Cumulative Redeemable Preferred Stock $ 100,000 $ 100,000
v3.23.2
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares
Jun. 30, 2023
Dec. 31, 2022
Preferred stock, par value (in dollars per share) $ 0.01 $ 0.01
Preferred stock, shares authorized (in shares) 100,000,000 100,000,000
Common stock, par value (in dollars per share) $ 0.01 $ 0.01
Common stock, shares authorized (in shares) 500,000,000 500,000,000
Common stock, shares issued (in shares) 207,184,691 209,320,447
Common stock, shares outstanding (in shares) 207,184,691 209,320,447
Series G Cumulative Redeemable Preferred Stock    
Preferred stock, Cumulative Redeemable Preferred Stock, shares issued (in shares) 2,650,000 2,650,000
Preferred stock, Cumulative Redeemable Preferred Stock, shares outstanding (in shares) 2,650,000 2,650,000
Preferred stock, Cumulative Redeemable Preferred Stock, liquidation preference (in dollars per share) $ 25.00 $ 25.00
Series H Cumulative Redeemable Preferred Stock    
Preferred stock, Cumulative Redeemable Preferred Stock, dividend rate (as a percent) 6.125% 6.125%
Preferred stock, Cumulative Redeemable Preferred Stock, shares issued (in shares) 4,600,000 4,600,000
Preferred stock, Cumulative Redeemable Preferred Stock, shares outstanding (in shares) 4,600,000 4,600,000
Preferred stock, Cumulative Redeemable Preferred Stock, liquidation preference (in dollars per share) $ 25.00 $ 25.00
Series I Cumulative Redeemable Preferred Stock    
Preferred stock, Cumulative Redeemable Preferred Stock, dividend rate (as a percent) 5.70% 5.70%
Preferred stock, Cumulative Redeemable Preferred Stock, shares issued (in shares) 4,000,000 4,000,000
Preferred stock, Cumulative Redeemable Preferred Stock, shares outstanding (in shares) 4,000,000 4,000,000
Preferred stock, Cumulative Redeemable Preferred Stock, liquidation preference (in dollars per share) $ 25.00 $ 25.00
v3.23.2
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($)
shares in Thousands, $ in Thousands
 3 Months Ended 6 Months Ended
Jun. 30, 2023
Jun. 30, 2022
Jun. 30, 2023
Jun. 30, 2022
REVENUES        
Revenues $ 276,112 $ 251,280 $ 519,555 $ 423,595
OPERATING EXPENSES        
Advertising and promotion 13,897 11,621 26,919 22,095
Repairs and maintenance 9,606 8,273 19,052 17,987
Utilities 6,768 6,239 13,860 11,944
Franchise costs 4,560 4,280 8,478 7,284
Property tax, ground lease and insurance 19,378 17,455 38,611 33,446
Other property-level expenses 31,857 30,391 63,634 54,301
Corporate overhead 8,396 8,717 16,864 19,431
Depreciation and amortization 32,397 30,893 64,739 62,253
Total operating expenses 227,659 207,759 446,313 386,847
Interest and other income 4,639 116 5,180 4,496
Interest expense (9,223) (5,938) (23,017) (11,019)
Gain on sale of assets       22,946
Gain (loss) on extinguishment of debt, net 12 21 9,921 (192)
Income before income taxes 43,881 37,720 65,326 52,979
Income tax provision, net (803) (28) (1,161) (164)
Net Income 43,078 37,692 64,165 52,815
Income from consolidated joint venture attributable to noncontrolling interest   (2,343)   (3,477)
Preferred stock dividends (3,768) (3,773) (7,536) (7,546)
Income Attributable to Common Stockholders $ 39,310 $ 31,576 $ 56,629 $ 41,792
Basic and diluted per share amounts:        
Basic income attributable to common stockholders per common share (in dollars per share) $ 0.19 $ 0.15 $ 0.27 $ 0.19
Diluted income attributable to common stockholders per common share (in dollars per share) $ 0.19 $ 0.15 $ 0.27 $ 0.19
Basic weighted average common shares outstanding (in shares) 206,181 213,183 206,606 215,216
Diluted weighted average common shares outstanding (in shares) 206,828 213,183 207,095 215,216
Room        
REVENUES        
Revenues $ 173,399 $ 161,721 $ 325,837 $ 270,493
OPERATING EXPENSES        
Expenses 42,658 37,342 81,722 67,803
Food and beverage        
REVENUES        
Revenues 78,815 71,658 149,627 111,241
OPERATING EXPENSES        
Expenses 51,997 46,459 100,532 78,778
Other operating        
REVENUES        
Revenues 23,898 17,901 44,091 41,861
OPERATING EXPENSES        
Expenses $ 6,145 $ 6,089 $ 11,902 $ 11,525
v3.23.2
CONSOLIDATED STATEMENTS OF EQUITY - USD ($)
$ in Thousands
Series G Cumulative Redeemable Preferred Stock
Cumulative dividends and distributions
Series G Cumulative Redeemable Preferred Stock
Series H Cumulative Redeemable Preferred Stock
Cumulative dividends and distributions
Series H Cumulative Redeemable Preferred Stock
Series I Cumulative Redeemable Preferred Stock
Cumulative dividends and distributions
Series I Cumulative Redeemable Preferred Stock
Preferred Stock
Common Stock
Additional Paid In Capital
Retained Earnings
Cumulative dividends and distributions
Non-Controlling Interest in Consolidated Joint Venture
Total
Beginning Balance at Dec. 31, 2021             $ 281,250 $ 2,193 $ 2,631,484 $ 948,064 $ (1,664,024) $ 40,807 $ 2,239,774
Beginning Balance (in shares) at Dec. 31, 2021             11,250,000 219,333,783          
Increase (Decrease) in Stockholders' Equity                          
Amortization of deferred stock compensation                 3,701       3,701
Issuance of restricted common stock, net               $ 2 (3,353)       (3,351)
Issuance of restricted common stock, net (in shares)               213,179          
Preferred stock dividends and dividends payable $ (587) $ (587) $ (1,761) $ (1,761) $ (1,425) $ (1,425)              
Repurchases of outstanding common stock               $ (38) (43,427)       (43,465)
Repurchases of outstanding common stock (in shares)               (3,879,025)          
Net Income                   13,989   1,134 15,123
Ending Balance at Mar. 31, 2022             $ 281,250 $ 2,157 2,588,405 962,053 (1,667,797) 41,941 2,208,009
Ending Balance (in shares) at Mar. 31, 2022             11,250,000 215,667,937          
Beginning Balance at Dec. 31, 2021             $ 281,250 $ 2,193 2,631,484 948,064 (1,664,024) 40,807 2,239,774
Beginning Balance (in shares) at Dec. 31, 2021             11,250,000 219,333,783          
Increase (Decrease) in Stockholders' Equity                          
Net Income                         52,815
Ending Balance at Jun. 30, 2022             $ 281,250 $ 2,125 2,494,238 997,402 (1,671,570)   2,103,445
Ending Balance (in shares) at Jun. 30, 2022             11,250,000 212,450,788          
Beginning Balance at Mar. 31, 2022             $ 281,250 $ 2,157 2,588,405 962,053 (1,667,797) 41,941 2,208,009
Beginning Balance (in shares) at Mar. 31, 2022             11,250,000 215,667,937          
Increase (Decrease) in Stockholders' Equity                          
Amortization of deferred stock compensation                 2,971       2,971
Issuance of restricted common stock, net               $ 1 (92)       (91)
Issuance of restricted common stock, net (in shares)               53,616          
Forfeiture of restricted common stock (in shares)               (34,807)          
Preferred stock dividends and dividends payable (587) (587) (1,761) (1,761) (1,425) (1,425)              
Distribution to noncontrolling interest                       (5,500) (5,500)
Repurchases of outstanding common stock               $ (33) (34,482)       (34,515)
Repurchases of outstanding common stock (in shares)               (3,235,958)          
Acquisition of noncontrolling interest, net                 (62,564)     (38,784) (101,348)
Net Income                   35,349   $ 2,343 37,692
Ending Balance at Jun. 30, 2022             $ 281,250 $ 2,125 2,494,238 997,402 (1,671,570)   2,103,445
Ending Balance (in shares) at Jun. 30, 2022             11,250,000 212,450,788          
Beginning Balance at Dec. 31, 2022             $ 281,250 $ 2,093 2,465,595 1,035,353 (1,699,330)   2,084,961
Beginning Balance (in shares) at Dec. 31, 2022             11,250,000 209,320,447          
Increase (Decrease) in Stockholders' Equity                          
Amortization of deferred stock compensation                 2,545       2,545
Issuance of restricted common stock, net               $ 1 (3,349)       (3,348)
Issuance of restricted common stock, net (in shares)               55,970          
Forfeiture of restricted common stock (in shares)               (1,435)          
Common stock distributions and distributions payable                     (10,449)   (10,449)
Preferred stock dividends and dividends payable (582) (582) (1,761) (1,761) (1,425) (1,425)              
Repurchases of outstanding common stock               $ (20) (18,606)       (18,626)
Repurchases of outstanding common stock (in shares)               (1,964,923)          
Net Income                   21,087     21,087
Ending Balance at Mar. 31, 2023             $ 281,250 $ 2,074 2,446,185 1,056,440 (1,713,547)   2,072,402
Ending Balance (in shares) at Mar. 31, 2023             11,250,000 207,410,059          
Beginning Balance at Dec. 31, 2022             $ 281,250 $ 2,093 2,465,595 1,035,353 (1,699,330)   2,084,961
Beginning Balance (in shares) at Dec. 31, 2022             11,250,000 209,320,447          
Increase (Decrease) in Stockholders' Equity                          
Net Income                         64,165
Ending Balance at Jun. 30, 2023             $ 281,250 $ 2,072 2,446,047 1,099,518 (1,727,763)   2,101,124
Ending Balance (in shares) at Jun. 30, 2023             11,250,000 207,184,691          
Beginning Balance at Mar. 31, 2023             $ 281,250 $ 2,074 2,446,185 1,056,440 (1,713,547)   2,072,402
Beginning Balance (in shares) at Mar. 31, 2023             11,250,000 207,410,059          
Increase (Decrease) in Stockholders' Equity                          
Amortization of deferred stock compensation                 3,442       3,442
Issuance of restricted common stock, net               $ 1 (429)       (428)
Issuance of restricted common stock, net (in shares)               82,552          
Forfeiture of restricted common stock (in shares)               (6,459)          
Common stock distributions and distributions payable                     (10,448)   (10,448)
Preferred stock dividends and dividends payable $ (582) $ (582) $ (1,761) $ (1,761) $ (1,425) $ (1,425)              
Repurchases of outstanding common stock               $ (3) (2,852)       (2,855)
Repurchases of outstanding common stock (in shares)               (301,461)          
Acquisition of noncontrolling interest, net                 (299)       (299)
Net Income                   43,078     43,078
Ending Balance at Jun. 30, 2023             $ 281,250 $ 2,072 $ 2,446,047 $ 1,099,518 $ (1,727,763)   $ 2,101,124
Ending Balance (in shares) at Jun. 30, 2023             11,250,000 207,184,691          
v3.23.2
CONSOLIDATED STATEMENT OF EQUITY (Parenthetical) - $ / shares
 3 Months Ended
Jun. 30, 2023
Mar. 31, 2023
Jun. 30, 2022
Mar. 31, 2022
Common stock distributions and distributions payable, per share (in dollars per share) $ 0.05 $ 0.05    
Series G Cumulative Redeemable Preferred Stock        
Preferred stock dividends and dividends payable (in dollars per share) 0.219536 0.219536 $ 0.221475 $ 0.221475
Series H Cumulative Redeemable Preferred Stock        
Preferred stock dividends and dividends payable (in dollars per share) 0.382813 0.382813 0.382813 0.382813
Series I Cumulative Redeemable Preferred Stock        
Preferred stock dividends and dividends payable (in dollars per share) $ 0.356250 $ 0.356250 $ 0.356250 $ 0.356250
v3.23.2
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)
 3 Months Ended 6 Months Ended
Jun. 30, 2022
Jun. 30, 2023
Jun. 30, 2022
CASH FLOWS FROM OPERATING ACTIVITIES      
Net Income $ 37,692,000 $ 64,165,000 $ 52,815,000
Adjustments to reconcile net income to net cash provided by operating activities:      
Bad debt expense   71,000 313,000
Gain on sale of assets     (22,946,000)
(Gain) loss on extinguishment of debt, net (21,000) (9,921,000) 192,000
Noncash interest on derivatives, net   (1,879,000) (2,865,000)
Depreciation   64,480,000 62,011,000
Amortization of franchise fees and other intangibles   223,000 218,000
Amortization of deferred financing costs 671,000 1,220,000 1,351,000
Amortization of deferred stock compensation   5,752,000 6,431,000
Gain on hurricane-related damage   (3,722,000) (4,369,000)
Changes in operating assets and liabilities:      
Accounts receivable   (2,205,000) (12,147,000)
Prepaid expenses and other assets   (243,000) 5,705,000
Accounts payable and other liabilities   (6,584,000) 7,063,000
Accrued payroll and employee benefits   (4,300,000) (2,419,000)
Operating lease right-of-use assets and obligations   (69,000) (700,000)
Net cash provided by operating activities   106,988,000 90,653,000
CASH FLOWS FROM INVESTING ACTIVITIES      
Proceeds from sales of assets     191,291,000
Proceeds from property insurance     4,369,000
Acquisitions of hotel properties and other assets     (232,506,000)
Renovations and additions to hotel properties and other assets   (49,219,000) (62,621,000)
Net cash used in investing activities   (49,219,000) (99,467,000)
CASH FLOWS FROM FINANCING ACTIVITIES      
Acquisition of noncontrolling interest, including transaction costs   (299,000) (101,348,000)
Payment of stock issuance costs   (428,000) (91,000)
Repurchases of outstanding common stock   (21,481,000) (77,980,000)
Repurchases of common stock for employee tax obligations   (3,348,000) (3,351,000)
Proceeds from credit facility     230,000,000
Proceeds from notes payable   225,000,000  
Payments on notes payable   (221,036,000) (35,994,000)
Payments of deferred financing costs   (2,332,000)  
Dividends and distributions paid   (27,537,000) (6,699,000)
Distributions to noncontrolling interest     (5,500,000)
Net cash used in financing activities   (51,461,000) (963,000)
Net increase (decrease) in cash and cash equivalents and restricted cash   6,308,000 (9,777,000)
Cash and cash equivalents and restricted cash, beginning of period   157,206,000 162,717,000
Cash and cash equivalents and restricted cash, end of period 152,940,000 163,514,000 152,940,000
Supplemental Disclosure of Cash Flow Information      
Cash and cash equivalents 107,329,000 107,846,000 107,329,000
Restricted cash 45,611,000 55,668,000 45,611,000
Total cash and cash equivalents and restricted cash shown on the consolidated statements of cash flows 152,940,000 163,514,000 152,940,000
Cash paid for interest   24,330,000 13,412,000
Cash paid for income taxes, net   1,128,000 134,000
Operating cash flows used for operating leases   2,782,000 3,407,000
Changes in operating lease right-of-use assets   2,189,000 2,005,000
Changes in operating lease obligations   (2,258,000) (2,705,000)
Changes in operating lease right-of-use assets and lease obligations, net   (69,000) (700,000)
Supplemental Disclosure of Noncash Investing and Financing Activities      
Accrued renovations and additions to hotel properties and other assets   14,593,000 18,725,000
Disposition deposit received in prior year in connection with sale of hotel     4,000,000
Operating lease right-of-use asset obtained in exchange for operating lease obligation   2,163,000  
Assignment of finance lease right-of-use asset in connection with sale of hotel 44,712,000   44,712,000
Assignment of finance lease obligation in connection with sale of hotel 15,569,000   15,569,000
Assignment of operating lease right-of-use asset in connection with sale of hotel 2,275,000   2,275,000
Assignment of operating lease obligation in connection with sale of hotel 2,609,000   2,609,000
Amortization of deferred stock compensation - construction activities   235,000 241,000
Dividends and distributions payable $ 4,360,000 14,891,000 $ 4,360,000
Hilton Times Square      
Adjustments to reconcile net income to net cash provided by operating activities:      
(Gain) loss on extinguishment of debt, net   $ (9,900,000)  
v3.23.2
Organization and Description of Business
 6 Months Ended
Jun. 30, 2023
Organization and Description of Business  
Organization and Description of Business

1. Organization and Description of Business

​

Sunstone Hotel Investors, Inc. (the “Company”) was incorporated in Maryland on June 28, 2004 in anticipation of an initial public offering of common stock, which was consummated on October 26, 2004. The Company elected to be taxed as a real estate investment trust (“REIT”) for federal income tax purposes, commencing with its taxable year ended on December 31, 2004. The Company, through its 100% controlling interest in Sunstone Hotel Partnership, LLC (the “Operating Partnership”), of which the Company is the sole managing member, and the subsidiaries of the Operating Partnership, including Sunstone Hotel TRS Lessee, Inc. (the “TRS Lessee”) and its subsidiaries, invests in hotels where it can add value through capital investment, hotel repositioning and asset management. In addition, the Company seeks to capitalize on its portfolio’s embedded value and balance sheet strength to actively recycle past investments into new growth and value creation opportunities in order to deliver strong stockholder returns and superior per share net asset value growth.

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As a REIT, certain tax laws limit the amount of “non-qualifying” income the Company can earn, including income derived directly from the operation of hotels. The Company leases all of its hotels to its TRS Lessee, which in turn enters into long-term management agreements with third parties to manage the operations of the Company’s hotels, in transactions that are intended to generate qualifying income.

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As of June 30, 2023, the Company owned 15 hotels (the “15 Hotels”) currently held for investment. The Company’s third-party managers included the following:

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Number of Hotels

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Subsidiaries of Marriott International, Inc. or Marriott Hotel Services, Inc.

​

6

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Hyatt Hotels Corporation

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2

​

Four Seasons Hotels Limited

​

1

​

Highgate Hotels L.P. and an affiliate

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1

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Hilton Worldwide

​

1

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Interstate Hotels & Resorts, Inc.

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1

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Montage North America, LLC

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1

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Sage Hospitality Group

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1

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Singh Hospitality, LLC

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1

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Total hotels owned as of June 30, 2023

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15

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v3.23.2
Summary of Significant Accounting Policies
 6 Months Ended
Jun. 30, 2023
Summary of Significant Accounting Policies  
Summary of Significant Accounting Policies

2. Summary of Significant Accounting Policies

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Basis of Presentation

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The accompanying consolidated financial statements as of June 30, 2023 and December 31, 2022, and for the three and six months ended June 30, 2023 and 2022, include the accounts of the Company, the Operating Partnership, the TRS Lessee and their controlled subsidiaries. All significant intercompany balances and transactions have been eliminated. If the Company determines that it has an interest in a variable interest entity, the Company will consolidate the entity when it is determined to be the primary beneficiary of the entity.

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The accompanying interim financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) and in conformity with the rules and regulations of the Securities and Exchange Commission. In the Company’s opinion, the interim financial statements presented herein reflect all adjustments, consisting solely of normal and recurring adjustments, which are necessary to fairly present the interim financial statements. These financial statements should be read in conjunction with the financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, filed with the Securities and Exchange Commission on February 23, 2023. Operating results for the three and six months ended June 30, 2023 are not necessarily indicative of the results that may be expected for the year ending December 31, 2023.

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The Company does not have any comprehensive income other than what is included in net income. If the Company has any comprehensive income in the future such that a statement of comprehensive income would be necessary, the Company will include such statement in one continuous consolidated statement of operations.

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The Company has evaluated subsequent events through the date of issuance of these financial statements.

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Use of Estimates

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The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ materially from those estimates.

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Earnings Per Share

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The Company applies the two-class method when computing its earnings per share. Net income per share for each class of stock is calculated assuming all of the Company’s net income is distributed as dividends to each class of stock based on their contractual rights.

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Unvested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents (whether paid or unpaid), which include the Company’s time-based restricted stock awards, are considered participating securities and are included in the computation of earnings per share.

​

Basic earnings attributable to common stockholders per common share is computed based on the weighted average number of shares of common stock outstanding during each period. Diluted earnings attributable to common stockholders per common share is computed based on the weighted average number of shares of common stock outstanding during each period, plus potential common shares considered outstanding during the period, as long as the inclusion of such awards is not anti-dilutive. Potential common shares consist of unvested restricted stock awards and units, using the more dilutive of either the two-class method or the treasury stock method.

​

The following table sets forth the computation of basic and diluted earnings per common share (unaudited and in thousands, except per share data):

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Three Months Ended June 30,

​

Six Months Ended June 30,

​

    

2023

    

2022

    

2023

    

2022

Numerator:

​

​

​

​

​

​

​

​

​

​

​

​

Net income

​

$

43,078

​

$

37,692

​

$

64,165

​

$

52,815

Income from consolidated joint venture attributable to noncontrolling interest

​

​

—

​

​

(2,343)

​

​

—

​

​

(3,477)

Preferred stock dividends

​

​

(3,768)

​

​

(3,773)

​

​

(7,536)

​

​

(7,546)

Distributions paid to participating securities

​

​

(52)

​

​

—

​

​

(104)

​

​

—

Undistributed income allocated to participating securities

​

​

(144)

​

​

(266)

​

​

(194)

​

​

(327)

Numerator for basic and diluted income attributable to common stockholders

​

$

39,114

​

$

31,310

​

$

56,331

​

$

41,465

Denominator:

​

​

​

​

​

​

​

​

​

​

​

​

Weighted average basic common shares outstanding

​

​

206,181

​

​

213,183

​

​

206,606

​

​

215,216

Unvested restricted stock units

​

​

647

​

​

—

​

​

489

​

​

—

Weighted average diluted common shares outstanding

​

​

206,828

​

​

213,183

​

​

207,095

​

​

215,216

​

​

​

​

​

​

​

​

​

​

​

​

​

Basic income attributable to common stockholders per common share

​

$

0.19

​

$

0.15

​

$

0.27

​

$

0.19

Diluted income attributable to common stockholders per common share

​

$

0.19

​

$

0.15

​

$

0.27

​

$

0.19

​

In its calculation of diluted earnings per share, the Company excluded 1,032,564 anti-dilutive unvested time-based restricted stock awards for the three and six months ended June 30, 2023 and 1,289,146 anti-dilutive unvested time-based restricted stock awards for the three and six months ended June 30, 2022 (see Note 10).

​

The Company also had unvested performance-based restricted stock units as of June 30, 2023 and 2022 that are not considered participating securities as the awards contain forfeitable rights to dividends or dividend equivalents. The performance-based restricted

stock units were granted based on either target market condition thresholds or pre-determined price targets. Based on the Company’s common stock performance, the Company excluded 188,004 anti-dilutive performance-based restricted stock units from its calculations of diluted earnings per share for the three and six months ended June 30, 2023 and 2022 (see Note 10).

​

Restricted Cash

​

Restricted cash primarily includes lender reserves required by the Company’s debt agreements and reserves for operating expenses and capital expenditures required by certain of the Company’s management and franchise agreements. At times, restricted cash also includes hotel acquisition or disposition-related earnest money held in escrow reserves pending completion of the associated transaction. In addition, restricted cash as of June 30, 2023 and December 31, 2022 included $0.3 million and $10.2 million, respectively, held in escrow related to certain current and potential employee-related obligations of one of the Company’s former hotels and $0.2 million held as collateral for certain letters of credit as of both June 30, 2023 and December 31, 2022 (see Note 11). Restricted cash as of December 31, 2022 also included $3.1 million held in escrow for the purpose of satisfying any potential employee-related obligations that should arise in connection with the termination of hotel personnel and any employment claim by hotel personnel at the Four Seasons Resort Napa Valley (see Note 11).

​

Investments in Hotel Properties

​

Investments in hotel properties, including land, buildings, furniture, fixtures and equipment (“FF&E”) and identifiable intangible assets are recorded at their respective relative fair values for an asset acquisition or at their estimated fair values for a business acquisition. Property and equipment purchased after the hotel acquisition date is recorded at cost. Replacements and improvements are capitalized, while repairs and maintenance are expensed as incurred. Upon the sale or retirement of a fixed asset, the cost and related accumulated depreciation is removed from the Company’s accounts and any resulting gain or loss is included in the consolidated statements of operations.

​

Depreciation expense is based on the estimated life of the Company’s assets. The life of the assets is based on a number of assumptions, including the cost and timing of capital expenditures to maintain and refurbish the Company’s hotels, as well as specific market and economic conditions. Hotel properties are depreciated using the straight-line method over estimated useful lives primarily ranging from five years to forty years for buildings and improvements and three years to twelve years for FF&E. Intangible assets are amortized using the straight-line method over the shorter of their estimated useful life or over the length of the related agreement.

​

The Company’s investment in hotel properties, net also includes initial franchise fees which are recorded at cost and amortized using the straight-line method over the terms of the franchise agreements ranging from fifteen years to twenty years. All other franchise fees that are based on the Company’s results of operations are expensed as incurred.

​

While the Company believes its estimates are reasonable, a change in the estimated lives could affect depreciation expense and net income or the gain or loss on the sale of any of the Company’s hotels. The Company has not changed the useful lives of any of its assets during the periods discussed.

​

Impairment losses are recorded on investments in hotel properties to be held and used by the Company when indicators of impairment are present and the future undiscounted net cash flows, including potential sale proceeds, expected to be generated by those assets based on the Company’s anticipated investment horizon, are less than the assets’ carrying amount. The Company evaluates its investments in hotel properties to determine if there are indicators of impairment on a quarterly basis. No single indicator would necessarily result in the Company preparing an estimate to determine if a hotel’s future undiscounted cash flows are less than the carrying value of the hotel. The Company uses judgment to determine if the severity of any single indicator, or the fact there are a number of indicators of less severity that when combined, would result in an indication that a hotel requires an estimate of the undiscounted cash flows to determine if an impairment has occurred. The Company considers indicators of impairment such as, but not limited to, hotel disposition strategy and hold period, a significant decline in operating results not related to renovations or repositioning, physical damage to the property due to unforeseen events such as natural disasters, and an estimate or belief that the fair value is less than the carrying value. The Company performs an analysis to determine the recoverability of the hotel by comparing the future undiscounted cash flows expected to be generated by the hotel to the hotel’s carrying amount.

​

If a hotel is considered to be impaired, the related assets are adjusted to their estimated fair value and an impairment loss is recognized. The Company performs a fair value assessment using valuation techniques such as discounted cash flows and comparable sales transactions in the market to estimate the fair value of the hotel and, if appropriate and available, current estimated net sales proceeds from pending offers. The Company’s judgment is required in determining the discount rate, terminal capitalization rate, the estimated growth of revenues and expenses, net operating income and margins, as well as specific market and economic conditions. Based on the Company’s review, no hotels were impaired during either the three or six months ended June 30, 2023 and 2022.

​

Fair value represents the amount at which an asset could be bought or sold in a current transaction between willing parties, that is, other than a forced or liquidation sale. The estimation process involved in determining if assets have been impaired and in the determination of fair value is inherently uncertain because it requires estimates of current market yields as well as future events and conditions. Such future events and conditions include economic and market conditions, as well as the availability of suitable financing. The realization of the Company’s investment in hotel properties is dependent upon future uncertain events and conditions and, accordingly, the actual timing and amounts realized by the Company may be materially different from their estimated fair values.

​

Leases

​

The Company determines if a contract is a lease at inception. Leases with an initial term of twelve months or less are not recorded on the balance sheet. Expense for these short-term leases is recognized on a straight-line basis over the lease term. For leases with an initial term greater than twelve months, the Company records a right-of-use (“ROU”) asset and a corresponding lease obligation. ROU assets represent the Company’s right to use an underlying asset for the lease term, and lease obligations represent the Company’s obligation to make fixed lease payments as stipulated by the lease. The Company has elected to not separate lease components from nonlease components, resulting in the Company accounting for lease and nonlease components as one single lease component.

​

Leases are accounted for using a dual approach, classifying leases as either operating or financing based on the principle of whether or not the lease is effectively a financed purchase of the leased asset by the Company. This classification determines whether the lease expense is recognized on a straight-line basis over the term of the lease for operating leases or based on an effective interest method for finance leases.

​

Lease ROU assets are recognized at the lease commencement date and include the amount of the initial operating lease obligation, any lease payments made at or before the commencement date, excluding any lease incentives received, and any initial direct costs incurred. For leases that have extension options that the Company can exercise at its discretion, management uses judgment to determine if it is reasonably certain that the Company will in fact exercise such option. If the extension option is reasonably certain to occur, the Company includes the extended term’s lease payments in the calculation of the respective lease liability. None of the Company’s leases contain any material residual value guarantees or material restrictive covenants.

​

Lease obligations are recognized at the lease commencement date based on the present value of lease payments over the lease term. As the Company’s leases do not provide an implicit rate, the Company uses its incremental borrowing rate (“IBR”) based on information available at the commencement date in determining the present value of lease payments over the lease term. The IBR is the rate of interest that a lessee would have to pay to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment. In order to estimate the Company’s IBR, the Company first looks to its own unsecured debt offerings, and adjusts the rate for both length of term and secured borrowing using available market data as well as consultations with leading national financial institutions that are active in the issuance of both secured and unsecured notes.

​

The Company reviews its right-of-use assets for indicators of impairment. If such assets are considered to be impaired, the related assets are adjusted to their estimated fair value and an impairment loss is recognized. The impairment loss recognized is measured by the amount by which the carrying amount of the assets exceeds the estimated fair value of the assets. Based on the Company’s review, no ROU assets were impaired during either the three or six months ended June 30, 2023 and 2022.

​

Revenue Recognition

​

Revenues are recognized when control of the promised goods or services is transferred to hotel guests, which is generally defined as the date upon which a guest occupies a room and/or utilizes the hotel’s services. Room revenue and other occupancy based fees are recognized over a guest’s stay at the previously agreed upon daily rate. Some of the Company’s hotel rooms are booked through independent internet travel intermediaries. If the guest pays the independent internet travel intermediary directly, revenue for the room is recognized by the Company at the price the Company sold the room to the independent internet travel intermediary, less any discount or commission paid. If the guest pays the Company directly, revenue for the room is recognized by the Company on a gross basis, with the related discount or commission recognized in room expense. A majority of the Company’s hotels participate in frequent guest programs sponsored by the hotel brand owners whereby the hotel allows guests to earn loyalty points during their hotel stay. The Company expenses charges associated with these programs as incurred, and recognizes revenue at the amount it will receive from the brand when a guest redeems their loyalty points by staying at one of the Company’s hotels. In addition, some contracts for rooms or food and beverage services require an advance deposit, which the Company records as deferred revenue (or a contract liability) and recognizes once the performance obligations are satisfied. Cancellation fees and attrition fees, which are charged to groups when they do not fulfill their contracted minimum number of room nights or minimum food and beverage spending requirements, are typically recognized as revenue in the period the Company determines it is probable that a significant reversal in the amount of revenue recognized will not occur, which is generally the period in which these fees are collected.

​

Food and beverage revenue and other ancillary services revenue are generated when a customer chooses to purchase goods or services. The revenue is recognized when the goods or services are provided to the customer at the amount the Company expects to be entitled to in exchange for those goods or services. For ancillary services provided by third parties, the Company assesses whether it is the principal or the agent. If the Company is the principal, revenue is recognized based upon the gross sales price. If the Company is the agent, revenue is recognized based upon the commission earned from the third party.

​

Additionally, the Company collects sales, use, occupancy and other similar taxes from customers at its hotels at the time of purchase, which are not included in revenue. The Company records a liability upon collection of such taxes from the customer, and relieves the liability when payments are remitted to the applicable governmental agency.

​

Trade receivables and contract liabilities consisted of the following (in thousands):

​

​

​

​

​

​

​

​

​

​

June 30,

​

December 31,

​

​

2023

​

2022

​

​

(unaudited)

​

​

​

Trade receivables, net (1)

​

$

25,211

​

$

19,751

Contract liabilities (2)

​

$

51,010

​

$

50,219

(1)Trade receivables, net are included in accounts receivable, net on the accompanying consolidated balance sheets.
(2)Contract liabilities consist of advance deposits and are included in either other current liabilities or other liabilities on the accompanying consolidated balance sheets.

During the three months ended June 30, 2023 and 2022, the Company recognized approximately $11.4 million and $8.6 million, respectively, in revenue related to its outstanding contract liabilities. During the six months ended June 30, 2023 and 2022, the Company recognized approximately $38.9 million and $22.4 million, respectively, in revenue related to its outstanding contract liabilities.

​

Segment Reporting

​

The Company considers each of its hotels to be an operating segment and allocates resources and assesses the operating performance for each hotel. Because all of the Company’s hotels have similar economic characteristics, facilities and services, the hotels have been aggregated into one single reportable segment, hotel ownership.

​

New Accounting Standards and Accounting Changes

​

In March 2020, the FASB issued Accounting Standards Update No. 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting” (“ASU No. 2020-04”), which provides temporary optional expedients and exceptions to the guidance in GAAP on contract modifications and hedge accounting to ease reporting burdens related to the expected market transition from the London Interbank Offered Rate (“LIBOR”) and other interbank offered rates to alternative reference rates, such as the Secured Overnight Financing Rate (“SOFR”). Contracts that meet the following criteria are eligible for relief from the modification accounting requirements in GAAP: the contract references LIBOR or another rate that is expected to be discontinued due to reference rate reform; the modified terms directly replace or have the potential to replace the reference rate that is expected to be discontinued due to reference rate reform; and any contemporaneous changes to other terms that change or have the potential to change the amount and timing of contractual cash flows must be related to the replacement of the reference rate. For a contract that meets the criteria, the guidance generally allows an entity to account for and present modifications as an event that does not require contract remeasurement at the modification date or reassessment of a previous accounting determination. That is, the modified contract is accounted for as a continuation of the existing contract. ASU No. 2020-04 was effective upon issuance, applied prospectively from any date beginning March 12, 2020, and generally could not be applied to contract modifications that occurred after December 31, 2022. In December 2022, the FASB issued Accounting Standards Update No. 2022-06, “Reference Rate Reform

(Topic 848): Deferral of the Sunset Date of Topic 848” (“ASU No. 2022-06”), which deferred the sunset date from December 31, 2022 to December 31, 2024.

​

In May 2023, the Company repaid the $220.0 million loan secured by the Hilton San Diego Bayfront, which was subject to LIBOR, and the loan’s related interest rate cap derivative, which was also subject to LIBOR, was terminated (see Note 4). The Company’s adoptions of ASU No. 2020-04 and ASU No. 2022-06 in the second quarter of 2023 did not have a material impact on its consolidated financial statements.
v3.23.2
Investment in Hotel Properties
 6 Months Ended
Jun. 30, 2023
Investment in Hotel Properties  
Investment in Hotel Properties

3. Investment in Hotel Properties

​

Investment in hotel properties, net consisted of the following (in thousands):

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

June 30,

​

December 31,

​

    

2023

    

2022

​

​

(unaudited)

​

​

​

Land

​

$

672,623

​

$

672,531

Buildings and improvements

​

​

2,808,999

​

​

2,793,771

Furniture, fixtures and equipment

​

​

432,326

​

​

426,189

Intangible assets

​

​

42,187

​

​

42,187

Construction in progress

​

​

104,398

​

​

71,689

Investment in hotel properties, gross

​

​

4,060,533

​

​

4,006,367

Accumulated depreciation and amortization

​

​

(1,229,794)

​

​

(1,165,439)

Investment in hotel properties, net

​

$

2,830,739

​

$

2,840,928

​
v3.23.2
Fair Value Measurements and Interest Rate Derivatives
 6 Months Ended
Jun. 30, 2023
Fair Value Measurements and Interest Rate Derivatives  
Fair Value Measurements and Interest Rate Derivatives

4. Fair Value Measurements and Interest Rate Derivatives

​

Fair Value Measurements

​

As of June 30, 2023 and December 31, 2022, the carrying amount of certain financial instruments, including cash and cash equivalents, restricted cash, accounts receivable and accounts payable and accrued expenses were representative of their fair values due to the short-term maturity of these instruments.

​

A fair value measurement is based on the assumptions that market participants would use in pricing an asset or liability in an orderly transaction. The hierarchy for inputs used in measuring fair value is as follows:

​

​

​

Level 1

Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.

​

​

Level 2

Inputs reflect quoted prices for identical assets or liabilities in markets that are not active; quoted prices for similar assets or liabilities in active markets; inputs other than quoted prices that are observable for the asset or the liability; or inputs that are derived principally from or corroborated by observable market data by correlation or other means.

​

​

Level 3

Unobservable inputs reflecting the Company’s own assumptions incorporated in valuation techniques used to determine fair value. These assumptions are required to be consistent with market participant assumptions that are reasonably available.

​

As of both June 30, 2023 and December 31, 2022, the Company measured its interest rate derivatives at fair value on a recurring basis. The Company estimated the fair value of its interest rate derivatives using Level 2 measurements based on quotes obtained from the counterparties, which are based upon the consideration that would be required to terminate the agreements.

​

Fair Value of Debt

​

As of June 30, 2023 and December 31, 2022, 51.2% and 42.4%, respectively, of the Company’s outstanding debt had fixed interest rates, including the effects of interest rate swap derivatives and forward starting interest rate swap derivatives. The Company uses Level 3 measurements to estimate the fair value of its debt by discounting the future cash flows of each instrument at estimated market rates.

​

The Company’s principal balances and fair market values of its consolidated debt as of June 30, 2023 (unaudited) and December 31, 2022 were as follows (in thousands):

​

​

​

​

​

​

​

​

​

​

​

​

​

​

June 30, 2023

​

December 31, 2022

​

Carrying Amount (1)

​

Fair Value (2)

​

Carrying Amount (1)

​

Fair Value (2)

Debt

$

820,100

​

$

801,197

​

$

816,136

​

$

809,141

​

​

​

​

​

​

​

​

​

​

​

​

(1)The principal balance of debt is presented before any unamortized deferred financing costs.
(2)Due to prevailing market conditions and the current uncertain economic environment, actual interest rates could vary materially from those estimated, which would result in variances in the Company’s calculations of the fair market value of its debt.

​

Interest Rate Derivatives

​

The Company’s interest rate derivatives, which are not designated as effective cash flow hedges, consisted of the following at June 30, 2023 (unaudited) and December 31, 2022 (in thousands):

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Estimated Fair Value of Assets (1)

​

​

Strike / Capped

​

Effective

Maturity

​

Notional

​

June 30,

​

December 31,

Hedged Debt

Type

Rate

Index

Date

Date

​

Amount

​

2023

​

2022

Hilton San Diego Bayfront

Cap

6.000

%

1-Month LIBOR

December 9, 2022

December 9, 2023

​

$

N/A

​

$

N/A

​

$

60

Term Loan 1

Swap

3.675

%

CME Term SOFR

March 17, 2023

March 17, 2026

​

$

75,000

​

​

1,438

​

​

N/A

Term Loan 1

Swap

3.931

%

CME Term SOFR

September 14, 2023

September 14, 2026

​

$

100,000

​

​

709

​

​

N/A

Term Loan 2

Swap

1.853

%

1-Month LIBOR

January 29, 2016

January 31, 2023

​

​

N/A

​

​

N/A

​

​

208

​

​

​

​

​

​

​

​

​

​

​

$

2,147

​

$

268

(1)In May 2023, the cap derivative was terminated in conjunction with the Company’s repayment of the loan secured by the Hilton San Diego Bayfront (see Note 6). The fair value of the cap derivative is included in prepaid expenses and other current assets on the accompanying consolidated balance sheet as of December 31, 2022. The Term Loan 1 swap derivatives are included in other assets on the accompanying consolidated balance sheet as of June 30, 2023. The fair value of the Term Loan 2 swap derivative is included in prepaid expenses and other current assets on the accompanying consolidated balance sheet as of December 31, 2022.

Noncash changes in the fair values of the Company’s interest rate derivatives resulted in decreases to interest expense for the three and six months ended June 30, 2023 and 2022 as follows (unaudited and in thousands):

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Three Months Ended June 30,

​

Six Months Ended June 30,

​

​

​

2023

​

2022

​

2023

​

2022

​

Noncash interest on derivatives, net

​

$

(3,711)

​

$

(1,023)

​

$

(1,879)

​

$

(2,865)

​

​
v3.23.2
Other Assets
 6 Months Ended
Jun. 30, 2023
Other Assets.  
Other Assets

5. Other Assets

​

Other assets, net consisted of the following (in thousands):

​

​

​

​

​

​

​

​

​

​

June 30,

​

December 31,

​

    

2023

    

2022

​

​

(unaudited)

​

​

​

Property and equipment, net

​

$

3,514

​

$

3,685

Deferred rent on straight-lined third-party tenant leases

​

​

2,289

​

​

2,413

Liquor licenses

​

​

930

​

​

933

Interest rate swap derivatives

​

​

2,147

​

​

—

Other

​

​

439

​

​

836

Total other assets, net

​

$

9,319

​

$

7,867

​
v3.23.2
Notes Payable
 6 Months Ended
Jun. 30, 2023
Debt Disclosures  
Notes Payable

6. Notes Payable

​

Notes payable consisted of the following (in thousands):

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Balance Outstanding as of

​

​

​

​

Interest Rate

​

​

​

June 30,

​

December 31,

​

​

Rate Type

​

at June 30, 2023

​

Maturity Date

​

2023

​

2022

​

​

​

​

​

​

​

​

(unaudited)

​

​

​

Mortgage Loans

​

​

​

​

​

​

​

​

​

​

​

​

Hilton San Diego Bayfront

​

Partially fixed

(1)

N/A

​

December 9, 2023

​

$

—

​

$

220,000

JW Marriott New Orleans

​

Fixed

​

4.15

%

December 11, 2024

​

​

75,100

​

​

76,136

Total mortgage loans

​

​

​

​

​

​

​

$

75,100

​

$

296,136

Unsecured Corporate Credit Facilities

​

​

​

​

​

​

​

​

​

​

​

​

Term Loan 1

​

Partially fixed

(2)

5.94

%

July 25, 2027

​

$

175,000

​

$

175,000

Term Loan 2

​

Variable

(3)

6.59

%

January 25, 2028

​

​

175,000

​

​

175,000

Term Loan 3

​

Variable

(4)

6.59

%

May 1, 2025

​

​

225,000

​

​

—

Total unsecured corporate credit facilities

​

​

​

​

​

​

​

$

575,000

​

$

350,000

Unsecured Senior Notes

​

​

​

​

​

​

​

​

​

​

​

​

Series A

​

Fixed

​

4.69

%

January 10, 2026

​

$

65,000

​

$

65,000

Series B

​

Fixed

​

4.79

%

January 10, 2028

​

​

105,000

​

​

105,000

Total unsecured senior notes

​

​

​

​

​

​

​

$

170,000

​

$

170,000

Total notes payable

​

​

​

​

​

​

​

$

820,100

​

$

816,136

(1)The mortgage loan secured by the Hilton San Diego Bayfront was repaid on May 9, 2023, using proceeds received from the Company’s Term Loan 3. The mortgage loan was subject to an interest rate cap derivative (see Note 4). The effective interest rate on the loan was 5.571% at December 31, 2022.
(2)Term Loan 1 is subject to two interest rate swap derivatives (see Note 4). The variable interest rate is based on a pricing grid with a range of 1.35% to 2.20%, depending on the Company’s leverage ratios, plus SOFR and a 0.10% adjustment. In May 2023, the pricing grid was reduced by 0.02% to a range of 1.33% to 2.18% as the Company achieved the 2022 sustainability performance metric specified in the Second Amended Credit Agreement. The reduction in the pricing grid will be evaluated annually and is subject to the Company’s continued ability to satisfy its sustainability metric. The effective interest rates on the term loan were 5.94% and 5.82% at June 30, 2023 and December 31, 2022, respectively.
(3)Term Loan 2 was subject to an interest rate swap derivative until the swap expired in January 2023 (see Note 4). The variable interest rate is based on a pricing grid with a range of 1.35% to 2.20%, depending on the Company’s leverage ratios, plus SOFR and a 0.10% adjustment. In May 2023, the pricing grid was reduced by 0.02% to a range of 1.33% to 2.18% as the Company achieved the 2022 sustainability performance metric specified in the Second Amended Credit Agreement. The reduction in the pricing grid will be evaluated annually and is subject to the Company’s continued ability to satisfy its sustainability metric. The effective interest rates on the term loan were 6.59% and 4.27% at June 30, 2023 and December 31, 2022, respectively.
(4)On May 1, 2023, the Company entered into a term loan agreement (“Term Loan 3”) and drew a total of $225.0 million, of which $220.0 million was used to repay the mortgage loan secured by the Hilton San Diego Bayfront. The variable interest rate is based on a pricing grid with a range of 1.35% to 2.20%, depending on the Company’s leverage ratios, plus SOFR and a 0.10% adjustment. Term Loan 3 matures on May 1, 2025, with a one-time option to extend the loan by twelve months to May 1, 2026 upon the payment of applicable fees and the satisfaction of certain customary conditions. The Company also has the right to increase Term Loan 3 in an amount up to $50.0 million, for an aggregate facility of $275.0 million from lenders that are willing at such time to provide such increase. The effective interest rate on the term loan was 6.59% at June 30, 2023.

​

As of June 30, 2023, the Company had no amount outstanding on its credit facility, with $500.0 million of capacity available for borrowing under the facility. The Company’s ability to draw on the credit facility is subject to the Company’s compliance with various financial covenants.

​

Notes payable on the Company’s accompanying consolidated balance sheets are presented net of deferred financing costs as follows (in thousands):

​

​

​

​

​

​

​

​

​

​

June 30,

​

December 31,

​

    

2023

    

2022

​

​

(unaudited)

​

​

​

Current portion of notes payable

​

$

2,122

​

$

222,086

Less: current portion of deferred financing costs

​

​

(57)

​

​

(56)

Carrying value of current portion of notes payable

​

$

2,065

​

$

222,030

​

​

​

​

​

​

​

Notes payable, less current portion

​

$

817,978

​

$

594,050

Less: long-term portion of deferred financing costs

​

 

(5,212)

​

 

(3,399)

Carrying value of notes payable, less current portion

​

$

812,766

​

$

590,651

​

Interest Expense

​

Total interest incurred and expensed on the notes payable and finance lease obligation was as follows (unaudited and in thousands):

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Three Months Ended June 30,

​

Six Months Ended June 30,

​

    

2023

    

2022

    

2023

    

2022

Interest expense on debt and finance lease obligation

​

$

12,259

​

$

6,290

​

$

23,676

​

$

12,533

Noncash interest on derivatives, net

​

​

(3,711)

​

​

(1,023)

​

​

(1,879)

​

​

(2,865)

Amortization of deferred financing costs

​

​

675

​

​

671

​

​

1,220

​

​

1,351

Total interest expense

​

$

9,223

​

$

5,938

​

$

23,017

​

$

11,019

​
v3.23.2
Other Current Liabilities and Other Liabilities
 6 Months Ended
Jun. 30, 2023
Other Current Liabilities and Other Liabilities  
Other Current Liabilities and Other Liabilities

7. Other Current Liabilities and Other Liabilities

​

Other Current Liabilities

​

Other current liabilities consisted of the following (in thousands):

​

​

​

​

​

​

​

​

​

​

June 30,

​

December 31,

​

    

2023

    

2022

​

​

(unaudited)

​

​

​

Property, sales and use taxes payable

​

$

10,582

​

$

7,500

Accrued interest

​

​

6,260

​

​

6,915

Advance deposits

​

​

44,088

​

​

44,224

Management fees payable

​

​

1,329

​

​

1,584

Other

​

​

4,222

​

​

4,990

Total other current liabilities

​

$

66,481

​

$

65,213

​

Other Liabilities

​

Other liabilities consisted of the following (in thousands):

​

​

​

​

​

​

​

​

​

​

June 30,

​

December 31,

​

    

2023

    

2022

​

​

(unaudited)

​

​

​

Deferred revenue

​

$

7,000

​

$

6,088

Deferred rent

​

​

2,065

​

​

2,718

Other

​

​

2,079

​

​

3,151

Total other liabilities

​

$

11,144

​

$

11,957

​
v3.23.2
Leases
 6 Months Ended
Jun. 30, 2023
Leases  
Leases

8. Leases

​

As of both June 30, 2023 and December 31, 2022, the Company had operating leases for ground, office, equipment and airspace leases with maturity dates ranging from 2024 through 2097, excluding renewal options. Including renewal options available to the Company, the lease maturity date extends to 2147.

​

Operating leases were included on the Company’s consolidated balance sheets as follows (in thousands):

​

​

​

​

​

​

​

​

​

​

​

June 30,

​

December 31,

​

​

​

2023

​

2022

​

​

​

(unaudited)

​

​

​

​

Right-of-use assets, net

​

$

14,999

​

$

15,025

​

​

​

​

​

​

​

​

​

Accounts payable and accrued expenses

​

$

4,745

​

$

4,652

​

Lease obligations, less current portion

​

​

14,267

​

​

14,360

​

Total lease obligations

​

$

19,012

​

$

19,012

​

​

​

​

​

​

​

​

​

Weighted average remaining lease term

​

​

33 years

​

​

​

​

Weighted average discount rate

​

​

5.3

%

​

​

​

​

In January 2023, the Company relocated its corporate headquarters and recognized a $2.2 million operating lease right-of-use asset and related lease obligation.

​

The components of lease expense were as follows (unaudited and in thousands):

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Three Months Ended June 30,

​

Six Months Ended June 30,

​

​

2023

​

2022

​

2023

​

2022

Finance lease cost (1):

​

​

​

​

​

​

​

​

​

​

​

​

Interest on lease obligation

​

$

—

​

$

—

​

$

—

​

$

117

Operating lease cost

​

​

1,349

​

​

1,327

​

​

2,708

​

​

2,716

Variable lease cost (2)

​

​

2,197

​

​

1,978

​

​

4,283

​

​

2,859

Sublease income (3)

​

​

(297)

​

​

—

​

​

(594)

​

​

—

Total lease cost

​

$

3,249

​

$

3,305

​

$

6,397

​

$

5,692

(1)Finance lease cost for the three months ended June 30, 2022 included expenses for the Hyatt Centric Chicago Magnificent Mile’s finance lease obligation before the hotel’s sale in February 2022.
(2)Several of the Company’s hotels pay percentage rent, which is calculated on operating revenues above certain thresholds.
(3)During the fourth quarter of 2022, the Company entered into a sublease agreement on its previous corporate headquarters, which became effective in January 2023. Sublease income is included in corporate overhead in the accompanying consolidated statement of operations for the three and six months ended June 30, 2023.

​
v3.23.2
Stockholders' Equity
 6 Months Ended
Jun. 30, 2023
Stockholders' Equity  
Stockholders' Equity

9. Stockholders’ Equity

​

Series G Cumulative Redeemable Preferred Stock

​

Contemporaneous with the Company’s April 2021 purchase of the Montage Healdsburg, the Company issued 2,650,000 shares of its Series G Cumulative Redeemable Preferred Stock (“Series G preferred stock”) to the hotel’s seller as partial payment of the hotel. The Series G preferred stock, which is callable at its $25.00 redemption price plus accrued and unpaid dividends by the Company at any time, accrues dividends at an initial rate equal to the Montage Healdsburg’s annual net operating income yield on the Company’s investment in the resort. The annual dividend rate is expected to increase in 2024 to the greater of 3.0% or the rate equal to the Montage Healdsburg’s annual net operating income yield on the Company’s total investment in the resort. The Series G preferred stock is not convertible into any other security.

​

Series H Cumulative Redeemable Preferred Stock

​

In May 2021, the Company issued 4,600,000 shares of its 6.125% Series H Cumulative Redeemable Preferred Stock (“Series H preferred stock”) with a liquidation preference of $25.00. On or after May 24, 2026, the Series H preferred stock will be redeemable at the Company’s option, in whole or in part, at any time or from time to time, for cash at a redemption price of $25.00 per share, plus accrued and unpaid dividends up to, but not including, the redemption date. Upon the occurrence of a change of control, as defined by

the Articles Supplementary for Series H preferred stock, the Company may at its option redeem the Series H preferred stock for cash at a redemption price of $25.00 per share, plus accrued and unpaid dividends up to, but not including, the redemption date. If the Company chooses not to redeem the Series H preferred stock upon the occurrence of a change of control, holders of the Series H preferred stock may convert their preferred shares into shares of the Company’s common stock.

​

Series I Cumulative Redeemable Preferred Stock

​

In July 2021, the Company issued 4,000,000 shares of its 5.70% Series I Cumulative Redeemable Preferred Stock (“Series I preferred stock”) with a liquidation preference of $25.00. On or after July 16, 2026, the Series I preferred stock will be redeemable at the Company’s option, in whole or in part, at any time or from time to time, for cash at a redemption price of $25.00 per share, plus accrued and unpaid dividends up to, but not including, the redemption date. Upon the occurrence of a change of control, as defined by the Articles Supplementary for Series I preferred stock, the Company may at its option redeem the Series I preferred stock for cash at a redemption price of $25.00 per share, plus accrued and unpaid dividends up to, but not including, the redemption date. If the Company chooses not to redeem the Series I preferred stock upon the occurrence of a change of control, holders of the Series I preferred stock may convert their preferred shares into shares of the Company’s common stock.

​

Common Stock

​

Stock Repurchase Program. In February 2021, the Company’s board of directors reauthorized the Company’s existing stock repurchase program, allowing the Company to acquire up to $500.0 million of the Company’s common and preferred stock. The stock repurchase program has no stated expiration date. In February 2023, the Company’s board of directors reauthorized the existing stock repurchase program and restored the $500.0 million of aggregate common and preferred stock allowed to be repurchased under the program.

​

Details of the Company’s repurchases were as follows (dollars in thousands):

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Three Months Ended June 30,

​

Six Months Ended June 30,

​

​

2023

​

2022

​

2023

​

2022

Number of common shares repurchased

​

​

301,461

​

​

3,235,958

​

​

2,266,384

​

​

7,114,983

Cost, including fees and commissions

​

$

2,855

​

$

34,515

​

$

21,481

​

$

77,980

Number of preferred shares repurchased

​

​

—

​

​

—

​

​

—

​

​

—

​

As of June 30, 2023, $489.5 million remains available for repurchase under the stock repurchase program. Future repurchases will depend on various factors, including the Company’s capital needs and restrictions under its various financing agreements, as well as the price of the Company’s common and preferred stock.

​

ATM Agreements. In February 2017, the Company entered into separate “At the Market” Agreements (the “2017 ATM Agreements”) with several financial institutions. In accordance with the terms of the 2017 ATM Agreements, the Company could from time to time offer and sell shares of its common stock having an aggregate offering price of up to $300.0 million. In February 2023, the Company’s board of directors reauthorized the $300.0 million 2017 ATM Agreements, or new similar agreements.

​

In March 2023, the Company terminated the 2017 ATM Agreements and entered into similar separate “At the Market” Agreements (the “2023 ATM Agreements”) with several financial institutions. In accordance with the terms of the 2023 ATM Agreements, the Company may from time to time offer and sell shares of its common stock having an aggregate offering price of up to $300.0 million. No common stock was issued under either the 2017 ATM Agreements or the 2023 ATM Agreements during the three and six months ended June 30, 2023 and 2022, leaving $300.0 million available for sale.
v3.23.2
Incentive Award Plan
 6 Months Ended
Jun. 30, 2023
Incentive Award Plan  
Incentive Award Plan

10. Incentive Award Plan

​

The Company’s Incentive Award Plan (the “Plan”) provides for granting discretionary awards to employees, consultants and non-employee directors. The awards may be made in the form of options, restricted stock awards, dividend equivalents, stock payments, restricted stock units, other incentive awards, LTIP units or share appreciation rights.

​

Should a stock grant be forfeited prior to its vesting, the shares covered by the stock grant are added back to the Plan and remain available for future issuance. Shares of common stock tendered or withheld to satisfy the grant or exercise price or tax withholding obligations upon the vesting of a stock grant are not added back to the Plan.

​

Restricted shares and units are measured at fair value on the date of grant and amortized as compensation expense over the relevant requisite service period or derived service period. The Company has elected to account for forfeitures as they occur.

​

As of both June 30, 2023 and 2022, the Company’s issued and outstanding awards consisted of both time-based and performance-based restricted stock grants. The Company’s amortization expense, including forfeitures related to restricted shares was as follows (unaudited and in thousands):

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Three Months Ended June 30,

​

Six Months Ended June 30,

​

    

2023

    

2022

    

2023

    

2022

Amortization expense, including forfeitures

​

$

3,325

​

$

2,853

​

$

5,752

​

$

6,431

​

​

​

​

​

​

​

​

​

​

​

​

​

Capitalized compensation cost (1)

​

$

117

​

$

118

​

$

235

​

$

241

(1)The Company capitalizes compensation costs related to restricted shares granted to certain employees whose work is directly related to the Company’s capital investment in its hotels.

Restricted Stock Awards

​

The Company’s restricted stock awards are time-based restricted shares that generally vest over periods ranging from three years to five years from the date of grant. The following is a summary of non-vested restricted stock award activity for the six months ended June 30, 2023:

​

​

​

​

​

​

​

​

    

​

    

Weighted-Average

​

​

​

​

Grant Date

​

​

Number of Shares

​

Fair Value

Unvested at January 1, 2023

 

1,289,146

​

$

11.65

Granted

 

450,964

​

$

10.58

Vested

 

(699,652)

​

$

11.76

Forfeited

 

(7,894)

​

$

11.14

Unvested at June 30, 2023

 

1,032,564

​

$

11.11

​

Restricted Stock Units

​

The Company’s restricted stock units are performance-based restricted shares that generally vest based on the Company’s total relative shareholder return and the achievement of pre-determined stock price targets during performance periods ranging from two years to five years. The following is a summary of non-vested restricted stock unit activity, at target performance, for the six months ended June 30, 2023:

​

​

​

​

​

​

​

​

    

​

    

Weighted-Average

​

​

Target Number

​

Grant Date

​

​

of Shares

​

Fair Value

Unvested at January 1, 2023

 

612,584

​

$

10.40

Granted

 

463,576

​

$

11.07

Unvested at June 30, 2023

 

1,076,160

​

$

10.69

​

The restricted stock units granted during the first six months of 2023 vest based on the Company’s total relative shareholder return following a three year performance period. The number of shares that may become vested ranges from zero to 200%. The grant date fair values of the restricted stock units were determined using a Monte Carlo simulation model with the following assumptions:

​

​

​

​

​

Expected volatility

​

38.0

%

Dividend yield (1)

​

—

​

Risk-free rate

​

4.18

%

Expected term

​

3 years

​

(1)Dividend equivalents are assumed to be reinvested in shares of the Company’s common stock and dividend equivalents will only be paid to the extent the award vests.

​
v3.23.2
Commitments and Contingencies
 6 Months Ended
Jun. 30, 2023
Commitments and Contingencies  
Commitments and Contingencies

11. Commitments and Contingencies

​

Management Agreements

​

Management agreements with the Company’s third-party hotel managers currently require the Company to pay between 2.0% and 3.0% of total revenue of the managed hotels to the third-party managers each month as a basic management fee. In addition to basic management fees, provided that certain operating thresholds are met, the Company may also be required to pay incentive management fees to certain of its third-party managers.

​

Total basic management and incentive management fees were included in other property-level expenses on the Company’s consolidated statements of operations as follows (unaudited and in thousands):

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Three Months Ended June 30,

​

Six Months Ended June 30,

​

    

2023

    

2022

    

2023

    

2022

Basic management fees

​

$

7,599

​

$

6,946

​

$

14,327

​

$

11,615

Incentive management fees

​

​

2,415

​

​

3,067

​

​

5,942

​

​

4,625

Total basic and incentive management fees

​

$

10,014

​

$

10,013

​

$

20,269

​

$

16,240

​

License and Franchise Agreements

​

The Company has entered into license and franchise agreements related to certain of its hotels. The license and franchise agreements require the Company to, among other things, pay monthly fees that are calculated based on specified percentages of certain revenues. The license and franchise agreements generally contain specific standards for, and restrictions and limitations on, the operation and maintenance of the hotels which are established by the franchisors to maintain uniformity in the system created by each such franchisor. Such standards generally regulate the appearance of the hotel, quality and type of goods and services offered, signage and protection of trademarks. Compliance with such standards may from time to time require the Company to make significant expenditures for capital improvements.

​

Total license and franchise fees were included in franchise costs on the Company’s consolidated statements of operations as follows (unaudited and in thousands):

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Three Months Ended June 30,

​

Six Months Ended June 30,

​

    

2023

    

2022

    

2023

    

2022

Franchise assessments (1)

​

$

4,206

​

$

3,969

​

$

7,817

​

$

6,687

Franchise royalties

​

​

354

​

​

311

​

​

661

​

​

597

Total franchise costs

​

$

4,560

​

$

4,280

​

$

8,478

​

$

7,284

(1)Includes advertising, reservation and frequent guest program assessments.

​

Renovation and Construction Commitments

​

At June 30, 2023, the Company had various contracts outstanding with third parties in connection with the ongoing renovations of certain of its hotels. The remaining commitments under these contracts at June 30, 2023 totaled $49.6 million.

​

Concentration of Risk

​

The concentration of the Company’s hotels in California, Florida, Hawaii and Massachusetts exposes the Company’s business to economic and severe weather conditions, competition and real and personal property tax rates unique to these locales.

​

As of June 30, 2023, 11 of the 15 Hotels were geographically concentrated as follows (unaudited):

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Trailing 12-Month

​

​

​

​

​

Percentage of

​

Total Consolidated

​

​

    

Number of Hotels

    

Total Rooms

    

Revenue

    

California

​

5

​

34

%  

39

%  

Florida

​

3

​

17

%  

16

%  

Hawaii

​

1

​

7

%  

16

%  

Massachusetts

​

2

​

19

%  

17

%  

​

Other

​

In June 2023, the Company entered into an agreement to finalize its Hurricane Ida-related property damage claim and its business interruption claim at the Hilton New Orleans St. Charles, resulting in the recognition of $3.7 million for property damage expenses incurred and $0.5 million in business interruption proceeds, which are included in interest and other income and other operating revenue, respectively, on the accompanying consolidated statements of operations for the three and six months ended June 30, 2023.

​

In accordance with the assignment-in-lieu agreement executed in December 2020 between the Company and the mortgage holder of the Hilton Times Square, the Company was required to retain approximately $11.6 million related to certain current and potential employee-related obligations (the “potential obligation”), of which the Company was relieved of $1.0 million as of December 31, 2022. In February 2023, the Company was relieved of an additional $9.8 million of the potential obligation and the funds were released from escrow to the Company, resulting in a $9.8 million gain on extinguishment of debt. The remaining potential obligation is reassessed at the end of every quarter, resulting in a total gain on extinguishment of debt of $12,000 and $9.9 million included on the accompanying consolidated statements of operations for the three and six months ended June 30, 2023, respectively. As of June 30, 2023 and December 31, 2022, restricted cash on the accompanying consolidated balance sheets included $0.3 million and $10.2 million, respectively, which will continue to be held in escrow until the potential obligation is resolved. The potential obligation balances of $0.2 million and $10.2 million were included in accounts payable and accrued expenses on the accompanying consolidated balance sheets as of June 30, 2023 and December 31, 2022, respectively.

​

Coterminous with the Company’s acquisition of the Four Seasons Resort Napa Valley in 2021, the Company was required to deposit $3.1 million into a restricted bank account owned by the Company, but to which the hotel’s management company, Four Seasons, had sole and unrestricted access to withdraw funds for the purpose of satisfying any potential employee-related obligations that should arise in connection with potential future severance obligations, if those claims were not previously satisfied. The estimated future severance obligations total of $3.1 million was included in restricted cash on the accompanying consolidated balance sheet as of December 31, 2022. In January 2023, Four Seasons released the $3.1 million to the Company and the Company agreed to provide an unconditional guaranty to Four Seasons for the full and prompt payment of all amounts payable by the Company to Four Seasons relating to employee liability.

​

The Company has provided customary unsecured indemnities to certain lenders, including in particular, environmental indemnities. The Company has performed due diligence on the potential environmental risks, including obtaining an independent environmental review from outside environmental consultants. These indemnities obligate the Company to reimburse the indemnified parties for damages related to certain environmental matters. There is no term or damage limitation on these indemnities; however, if an environmental matter arises, the Company could have recourse against other previous owners or a claim against its environmental insurance policies.

​

At June 30, 2023, the Company had $0.2 million of outstanding irrevocable letters of credit to guarantee the Company’s financial obligations related to workers’ compensation insurance programs from prior policy years. The beneficiaries of these letters of credit may draw upon the letters of credit in the event of a contractual default by the Company relating to each respective obligation. No draws have been made through June 30, 2023. The letters of credit are collateralized with $0.2 million held in a restricted bank account owned by the Company, which is included in restricted cash on the accompanying consolidated balance sheets as of both June 30, 2023 and December 31, 2022.

​

The Company is subject to various claims, lawsuits and legal proceedings, including routine litigation arising in the ordinary course of business, regarding the operation of its hotels, its managers and other Company matters. While it is not possible to ascertain the ultimate outcome of such matters, the Company believes that the aggregate identifiable amount of such liabilities, if any, in excess of amounts covered by insurance will not have a material adverse impact on its financial condition or results of operations. The outcome of claims, lawsuits and legal proceedings, including any potential COVID-19-related litigation, brought against the Company, however, is subject to significant uncertainties.
v3.23.2
Summary of Significant Accounting Policies (Policies)
 6 Months Ended
Jun. 30, 2023
Summary of Significant Accounting Policies  
Basis of Presentation

Basis of Presentation

​

The accompanying consolidated financial statements as of June 30, 2023 and December 31, 2022, and for the three and six months ended June 30, 2023 and 2022, include the accounts of the Company, the Operating Partnership, the TRS Lessee and their controlled subsidiaries. All significant intercompany balances and transactions have been eliminated. If the Company determines that it has an interest in a variable interest entity, the Company will consolidate the entity when it is determined to be the primary beneficiary of the entity.

​

The accompanying interim financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) and in conformity with the rules and regulations of the Securities and Exchange Commission. In the Company’s opinion, the interim financial statements presented herein reflect all adjustments, consisting solely of normal and recurring adjustments, which are necessary to fairly present the interim financial statements. These financial statements should be read in conjunction with the financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, filed with the Securities and Exchange Commission on February 23, 2023. Operating results for the three and six months ended June 30, 2023 are not necessarily indicative of the results that may be expected for the year ending December 31, 2023.

​

The Company does not have any comprehensive income other than what is included in net income. If the Company has any comprehensive income in the future such that a statement of comprehensive income would be necessary, the Company will include such statement in one continuous consolidated statement of operations.

​

The Company has evaluated subsequent events through the date of issuance of these financial statements.
Use of Estimates

Use of Estimates

​

The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ materially from those estimates.

​
Earnings Per Share

Earnings Per Share

​

The Company applies the two-class method when computing its earnings per share. Net income per share for each class of stock is calculated assuming all of the Company’s net income is distributed as dividends to each class of stock based on their contractual rights.

​

Unvested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents (whether paid or unpaid), which include the Company’s time-based restricted stock awards, are considered participating securities and are included in the computation of earnings per share.

​

Basic earnings attributable to common stockholders per common share is computed based on the weighted average number of shares of common stock outstanding during each period. Diluted earnings attributable to common stockholders per common share is computed based on the weighted average number of shares of common stock outstanding during each period, plus potential common shares considered outstanding during the period, as long as the inclusion of such awards is not anti-dilutive. Potential common shares consist of unvested restricted stock awards and units, using the more dilutive of either the two-class method or the treasury stock method.

​

The following table sets forth the computation of basic and diluted earnings per common share (unaudited and in thousands, except per share data):

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Three Months Ended June 30,

​

Six Months Ended June 30,

​

    

2023

    

2022

    

2023

    

2022

Numerator:

​

​

​

​

​

​

​

​

​

​

​

​

Net income

​

$

43,078

​

$

37,692

​

$

64,165

​

$

52,815

Income from consolidated joint venture attributable to noncontrolling interest

​

​

—

​

​

(2,343)

​

​

—

​

​

(3,477)

Preferred stock dividends

​

​

(3,768)

​

​

(3,773)

​

​

(7,536)

​

​

(7,546)

Distributions paid to participating securities

​

​

(52)

​

​

—

​

​

(104)

​

​

—

Undistributed income allocated to participating securities

​

​

(144)

​

​

(266)

​

​

(194)

​

​

(327)

Numerator for basic and diluted income attributable to common stockholders

​

$

39,114

​

$

31,310

​

$

56,331

​

$

41,465

Denominator:

​

​

​

​

​

​

​

​

​

​

​

​

Weighted average basic common shares outstanding

​

​

206,181

​

​

213,183

​

​

206,606

​

​

215,216

Unvested restricted stock units

​

​

647

​

​

—

​

​

489

​

​

—

Weighted average diluted common shares outstanding

​

​

206,828

​

​

213,183

​

​

207,095

​

​

215,216

​

​

​

​

​

​

​

​

​

​

​

​

​

Basic income attributable to common stockholders per common share

​

$

0.19

​

$

0.15

​

$

0.27

​

$

0.19

Diluted income attributable to common stockholders per common share

​

$

0.19

​

$

0.15

​

$

0.27

​

$

0.19

​

In its calculation of diluted earnings per share, the Company excluded 1,032,564 anti-dilutive unvested time-based restricted stock awards for the three and six months ended June 30, 2023 and 1,289,146 anti-dilutive unvested time-based restricted stock awards for the three and six months ended June 30, 2022 (see Note 10).

​

The Company also had unvested performance-based restricted stock units as of June 30, 2023 and 2022 that are not considered participating securities as the awards contain forfeitable rights to dividends or dividend equivalents. The performance-based restricted

stock units were granted based on either target market condition thresholds or pre-determined price targets. Based on the Company’s common stock performance, the Company excluded 188,004 anti-dilutive performance-based restricted stock units from its calculations of diluted earnings per share for the three and six months ended June 30, 2023 and 2022 (see Note 10).

Restricted Cash

Restricted Cash

​

Restricted cash primarily includes lender reserves required by the Company’s debt agreements and reserves for operating expenses and capital expenditures required by certain of the Company’s management and franchise agreements. At times, restricted cash also includes hotel acquisition or disposition-related earnest money held in escrow reserves pending completion of the associated transaction. In addition, restricted cash as of June 30, 2023 and December 31, 2022 included $0.3 million and $10.2 million, respectively, held in escrow related to certain current and potential employee-related obligations of one of the Company’s former hotels and $0.2 million held as collateral for certain letters of credit as of both June 30, 2023 and December 31, 2022 (see Note 11). Restricted cash as of December 31, 2022 also included $3.1 million held in escrow for the purpose of satisfying any potential employee-related obligations that should arise in connection with the termination of hotel personnel and any employment claim by hotel personnel at the Four Seasons Resort Napa Valley (see Note 11).

Investments in Hotel Properties

Investments in Hotel Properties

​

Investments in hotel properties, including land, buildings, furniture, fixtures and equipment (“FF&E”) and identifiable intangible assets are recorded at their respective relative fair values for an asset acquisition or at their estimated fair values for a business acquisition. Property and equipment purchased after the hotel acquisition date is recorded at cost. Replacements and improvements are capitalized, while repairs and maintenance are expensed as incurred. Upon the sale or retirement of a fixed asset, the cost and related accumulated depreciation is removed from the Company’s accounts and any resulting gain or loss is included in the consolidated statements of operations.

​

Depreciation expense is based on the estimated life of the Company’s assets. The life of the assets is based on a number of assumptions, including the cost and timing of capital expenditures to maintain and refurbish the Company’s hotels, as well as specific market and economic conditions. Hotel properties are depreciated using the straight-line method over estimated useful lives primarily ranging from five years to forty years for buildings and improvements and three years to twelve years for FF&E. Intangible assets are amortized using the straight-line method over the shorter of their estimated useful life or over the length of the related agreement.

​

The Company’s investment in hotel properties, net also includes initial franchise fees which are recorded at cost and amortized using the straight-line method over the terms of the franchise agreements ranging from fifteen years to twenty years. All other franchise fees that are based on the Company’s results of operations are expensed as incurred.

​

While the Company believes its estimates are reasonable, a change in the estimated lives could affect depreciation expense and net income or the gain or loss on the sale of any of the Company’s hotels. The Company has not changed the useful lives of any of its assets during the periods discussed.

​

Impairment losses are recorded on investments in hotel properties to be held and used by the Company when indicators of impairment are present and the future undiscounted net cash flows, including potential sale proceeds, expected to be generated by those assets based on the Company’s anticipated investment horizon, are less than the assets’ carrying amount. The Company evaluates its investments in hotel properties to determine if there are indicators of impairment on a quarterly basis. No single indicator would necessarily result in the Company preparing an estimate to determine if a hotel’s future undiscounted cash flows are less than the carrying value of the hotel. The Company uses judgment to determine if the severity of any single indicator, or the fact there are a number of indicators of less severity that when combined, would result in an indication that a hotel requires an estimate of the undiscounted cash flows to determine if an impairment has occurred. The Company considers indicators of impairment such as, but not limited to, hotel disposition strategy and hold period, a significant decline in operating results not related to renovations or repositioning, physical damage to the property due to unforeseen events such as natural disasters, and an estimate or belief that the fair value is less than the carrying value. The Company performs an analysis to determine the recoverability of the hotel by comparing the future undiscounted cash flows expected to be generated by the hotel to the hotel’s carrying amount.

​

If a hotel is considered to be impaired, the related assets are adjusted to their estimated fair value and an impairment loss is recognized. The Company performs a fair value assessment using valuation techniques such as discounted cash flows and comparable sales transactions in the market to estimate the fair value of the hotel and, if appropriate and available, current estimated net sales proceeds from pending offers. The Company’s judgment is required in determining the discount rate, terminal capitalization rate, the estimated growth of revenues and expenses, net operating income and margins, as well as specific market and economic conditions. Based on the Company’s review, no hotels were impaired during either the three or six months ended June 30, 2023 and 2022.

​

Fair value represents the amount at which an asset could be bought or sold in a current transaction between willing parties, that is, other than a forced or liquidation sale. The estimation process involved in determining if assets have been impaired and in the determination of fair value is inherently uncertain because it requires estimates of current market yields as well as future events and conditions. Such future events and conditions include economic and market conditions, as well as the availability of suitable financing. The realization of the Company’s investment in hotel properties is dependent upon future uncertain events and conditions and, accordingly, the actual timing and amounts realized by the Company may be materially different from their estimated fair values.
Leases

Leases

​

The Company determines if a contract is a lease at inception. Leases with an initial term of twelve months or less are not recorded on the balance sheet. Expense for these short-term leases is recognized on a straight-line basis over the lease term. For leases with an initial term greater than twelve months, the Company records a right-of-use (“ROU”) asset and a corresponding lease obligation. ROU assets represent the Company’s right to use an underlying asset for the lease term, and lease obligations represent the Company’s obligation to make fixed lease payments as stipulated by the lease. The Company has elected to not separate lease components from nonlease components, resulting in the Company accounting for lease and nonlease components as one single lease component.

​

Leases are accounted for using a dual approach, classifying leases as either operating or financing based on the principle of whether or not the lease is effectively a financed purchase of the leased asset by the Company. This classification determines whether the lease expense is recognized on a straight-line basis over the term of the lease for operating leases or based on an effective interest method for finance leases.

​

Lease ROU assets are recognized at the lease commencement date and include the amount of the initial operating lease obligation, any lease payments made at or before the commencement date, excluding any lease incentives received, and any initial direct costs incurred. For leases that have extension options that the Company can exercise at its discretion, management uses judgment to determine if it is reasonably certain that the Company will in fact exercise such option. If the extension option is reasonably certain to occur, the Company includes the extended term’s lease payments in the calculation of the respective lease liability. None of the Company’s leases contain any material residual value guarantees or material restrictive covenants.

​

Lease obligations are recognized at the lease commencement date based on the present value of lease payments over the lease term. As the Company’s leases do not provide an implicit rate, the Company uses its incremental borrowing rate (“IBR”) based on information available at the commencement date in determining the present value of lease payments over the lease term. The IBR is the rate of interest that a lessee would have to pay to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment. In order to estimate the Company’s IBR, the Company first looks to its own unsecured debt offerings, and adjusts the rate for both length of term and secured borrowing using available market data as well as consultations with leading national financial institutions that are active in the issuance of both secured and unsecured notes.

​

The Company reviews its right-of-use assets for indicators of impairment. If such assets are considered to be impaired, the related assets are adjusted to their estimated fair value and an impairment loss is recognized. The impairment loss recognized is measured by the amount by which the carrying amount of the assets exceeds the estimated fair value of the assets. Based on the Company’s review, no ROU assets were impaired during either the three or six months ended June 30, 2023 and 2022.
Revenue Recognition

Revenue Recognition

​

Revenues are recognized when control of the promised goods or services is transferred to hotel guests, which is generally defined as the date upon which a guest occupies a room and/or utilizes the hotel’s services. Room revenue and other occupancy based fees are recognized over a guest’s stay at the previously agreed upon daily rate. Some of the Company’s hotel rooms are booked through independent internet travel intermediaries. If the guest pays the independent internet travel intermediary directly, revenue for the room is recognized by the Company at the price the Company sold the room to the independent internet travel intermediary, less any discount or commission paid. If the guest pays the Company directly, revenue for the room is recognized by the Company on a gross basis, with the related discount or commission recognized in room expense. A majority of the Company’s hotels participate in frequent guest programs sponsored by the hotel brand owners whereby the hotel allows guests to earn loyalty points during their hotel stay. The Company expenses charges associated with these programs as incurred, and recognizes revenue at the amount it will receive from the brand when a guest redeems their loyalty points by staying at one of the Company’s hotels. In addition, some contracts for rooms or food and beverage services require an advance deposit, which the Company records as deferred revenue (or a contract liability) and recognizes once the performance obligations are satisfied. Cancellation fees and attrition fees, which are charged to groups when they do not fulfill their contracted minimum number of room nights or minimum food and beverage spending requirements, are typically recognized as revenue in the period the Company determines it is probable that a significant reversal in the amount of revenue recognized will not occur, which is generally the period in which these fees are collected.

​

Food and beverage revenue and other ancillary services revenue are generated when a customer chooses to purchase goods or services. The revenue is recognized when the goods or services are provided to the customer at the amount the Company expects to be entitled to in exchange for those goods or services. For ancillary services provided by third parties, the Company assesses whether it is the principal or the agent. If the Company is the principal, revenue is recognized based upon the gross sales price. If the Company is the agent, revenue is recognized based upon the commission earned from the third party.

​

Additionally, the Company collects sales, use, occupancy and other similar taxes from customers at its hotels at the time of purchase, which are not included in revenue. The Company records a liability upon collection of such taxes from the customer, and relieves the liability when payments are remitted to the applicable governmental agency.

​

Trade receivables and contract liabilities consisted of the following (in thousands):

​

​

​

​

​

​

​

​

​

​

June 30,

​

December 31,

​

​

2023

​

2022

​

​

(unaudited)

​

​

​

Trade receivables, net (1)

​

$

25,211

​

$

19,751

Contract liabilities (2)

​

$

51,010

​

$

50,219

(1)Trade receivables, net are included in accounts receivable, net on the accompanying consolidated balance sheets.
(2)Contract liabilities consist of advance deposits and are included in either other current liabilities or other liabilities on the accompanying consolidated balance sheets.

During the three months ended June 30, 2023 and 2022, the Company recognized approximately $11.4 million and $8.6 million, respectively, in revenue related to its outstanding contract liabilities. During the six months ended June 30, 2023 and 2022, the Company recognized approximately $38.9 million and $22.4 million, respectively, in revenue related to its outstanding contract liabilities.

​
Segment Reporting

Segment Reporting

​

The Company considers each of its hotels to be an operating segment and allocates resources and assesses the operating performance for each hotel. Because all of the Company’s hotels have similar economic characteristics, facilities and services, the hotels have been aggregated into one single reportable segment, hotel ownership.
New Accounting Standards and Accounting Changes

New Accounting Standards and Accounting Changes

​

In March 2020, the FASB issued Accounting Standards Update No. 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting” (“ASU No. 2020-04”), which provides temporary optional expedients and exceptions to the guidance in GAAP on contract modifications and hedge accounting to ease reporting burdens related to the expected market transition from the London Interbank Offered Rate (“LIBOR”) and other interbank offered rates to alternative reference rates, such as the Secured Overnight Financing Rate (“SOFR”). Contracts that meet the following criteria are eligible for relief from the modification accounting requirements in GAAP: the contract references LIBOR or another rate that is expected to be discontinued due to reference rate reform; the modified terms directly replace or have the potential to replace the reference rate that is expected to be discontinued due to reference rate reform; and any contemporaneous changes to other terms that change or have the potential to change the amount and timing of contractual cash flows must be related to the replacement of the reference rate. For a contract that meets the criteria, the guidance generally allows an entity to account for and present modifications as an event that does not require contract remeasurement at the modification date or reassessment of a previous accounting determination. That is, the modified contract is accounted for as a continuation of the existing contract. ASU No. 2020-04 was effective upon issuance, applied prospectively from any date beginning March 12, 2020, and generally could not be applied to contract modifications that occurred after December 31, 2022. In December 2022, the FASB issued Accounting Standards Update No. 2022-06, “Reference Rate Reform

(Topic 848): Deferral of the Sunset Date of Topic 848” (“ASU No. 2022-06”), which deferred the sunset date from December 31, 2022 to December 31, 2024.

​

In May 2023, the Company repaid the $220.0 million loan secured by the Hilton San Diego Bayfront, which was subject to LIBOR, and the loan’s related interest rate cap derivative, which was also subject to LIBOR, was terminated (see Note 4). The Company’s adoptions of ASU No. 2020-04 and ASU No. 2022-06 in the second quarter of 2023 did not have a material impact on its consolidated financial statements.
v3.23.2
Organization and Description of Business (Tables)
 6 Months Ended
Jun. 30, 2023
Organization and Description of Business  
Schedule of number of hotels managed by each third-party manager

As of June 30, 2023, the Company owned 15 hotels (the “15 Hotels”) currently held for investment. The Company’s third-party managers included the following:

​

​

​

​

​

​

​

​

​

​

    

Number of Hotels

​

Subsidiaries of Marriott International, Inc. or Marriott Hotel Services, Inc.

​

6

​

Hyatt Hotels Corporation

​

2

​

Four Seasons Hotels Limited

​

1

​

Highgate Hotels L.P. and an affiliate

​

1

​

Hilton Worldwide

​

1

​

Interstate Hotels & Resorts, Inc.

​

1

​

Montage North America, LLC

​

1

​

Sage Hospitality Group

​

1

​

Singh Hospitality, LLC

​

1

​

​

​

​

​

Total hotels owned as of June 30, 2023

​

15

​
v3.23.2
Summary of Significant Accounting Policies (Tables)
 6 Months Ended
Jun. 30, 2023
Summary of Significant Accounting Policies  
Schedule of contract assets and liabilities

Trade receivables and contract liabilities consisted of the following (in thousands):

​

​

​

​

​

​

​

​

​

​

June 30,

​

December 31,

​

​

2023

​

2022

​

​

(unaudited)

​

​

​

Trade receivables, net (1)

​

$

25,211

​

$

19,751

Contract liabilities (2)

​

$

51,010

​

$

50,219

(1)Trade receivables, net are included in accounts receivable, net on the accompanying consolidated balance sheets.
(2)Contract liabilities consist of advance deposits and are included in either other current liabilities or other liabilities on the accompanying consolidated balance sheets.
Schedule of computation of basic and diluted earnings per common share

The following table sets forth the computation of basic and diluted earnings per common share (unaudited and in thousands, except per share data):

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Three Months Ended June 30,

​

Six Months Ended June 30,

​

    

2023

    

2022

    

2023

    

2022

Numerator:

​

​

​

​

​

​

​

​

​

​

​

​

Net income

​

$

43,078

​

$

37,692

​

$

64,165

​

$

52,815

Income from consolidated joint venture attributable to noncontrolling interest

​

​

—

​

​

(2,343)

​

​

—

​

​

(3,477)

Preferred stock dividends

​

​

(3,768)

​

​

(3,773)

​

​

(7,536)

​

​

(7,546)

Distributions paid to participating securities

​

​

(52)

​

​

—

​

​

(104)

​

​

—

Undistributed income allocated to participating securities

​

​

(144)

​

​

(266)

​

​

(194)

​

​

(327)

Numerator for basic and diluted income attributable to common stockholders

​

$

39,114

​

$

31,310

​

$

56,331

​

$

41,465

Denominator:

​

​

​

​

​

​

​

​

​

​

​

​

Weighted average basic common shares outstanding

​

​

206,181

​

​

213,183

​

​

206,606

​

​

215,216

Unvested restricted stock units

​

​

647

​

​

—

​

​

489

​

​

—

Weighted average diluted common shares outstanding

​

​

206,828

​

​

213,183

​

​

207,095

​

​

215,216

​

​

​

​

​

​

​

​

​

​

​

​

​

Basic income attributable to common stockholders per common share

​

$

0.19

​

$

0.15

​

$

0.27

​

$

0.19

Diluted income attributable to common stockholders per common share

​

$

0.19

​

$

0.15

​

$

0.27

​

$

0.19
v3.23.2
Investment in Hotel Properties (Tables)
 6 Months Ended
Jun. 30, 2023
Investment in Hotel Properties  
Schedule of investment in hotel properties

Investment in hotel properties, net consisted of the following (in thousands):

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

June 30,

​

December 31,

​

    

2023

    

2022

​

​

(unaudited)

​

​

​

Land

​

$

672,623

​

$

672,531

Buildings and improvements

​

​

2,808,999

​

​

2,793,771

Furniture, fixtures and equipment

​

​

432,326

​

​

426,189

Intangible assets

​

​

42,187

​

​

42,187

Construction in progress

​

​

104,398

​

​

71,689

Investment in hotel properties, gross

​

​

4,060,533

​

​

4,006,367

Accumulated depreciation and amortization

​

​

(1,229,794)

​

​

(1,165,439)

Investment in hotel properties, net

​

$

2,830,739

​

$

2,840,928
v3.23.2
Fair Value Measurements and Interest Rate Derivatives (Tables)
 6 Months Ended
Jun. 30, 2023
Fair Value Measurements and Interest Rate Derivatives  
Schedule of principal values and estimated fair values of debt

The Company’s principal balances and fair market values of its consolidated debt as of June 30, 2023 (unaudited) and December 31, 2022 were as follows (in thousands):

​

​

​

​

​

​

​

​

​

​

​

​

​

​

June 30, 2023

​

December 31, 2022

​

Carrying Amount (1)

​

Fair Value (2)

​

Carrying Amount (1)

​

Fair Value (2)

Debt

$

820,100

​

$

801,197

​

$

816,136

​

$

809,141

​

​

​

​

​

​

​

​

​

​

​

​

(1)The principal balance of debt is presented before any unamortized deferred financing costs.
(2)Due to prevailing market conditions and the current uncertain economic environment, actual interest rates could vary materially from those estimated, which would result in variances in the Company’s calculations of the fair market value of its debt.
Schedule of interest rate derivatives

The Company’s interest rate derivatives, which are not designated as effective cash flow hedges, consisted of the following at June 30, 2023 (unaudited) and December 31, 2022 (in thousands):

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Estimated Fair Value of Assets (1)

​

​

Strike / Capped

​

Effective

Maturity

​

Notional

​

June 30,

​

December 31,

Hedged Debt

Type

Rate

Index

Date

Date

​

Amount

​

2023

​

2022

Hilton San Diego Bayfront

Cap

6.000

%

1-Month LIBOR

December 9, 2022

December 9, 2023

​

$

N/A

​

$

N/A

​

$

60

Term Loan 1

Swap

3.675

%

CME Term SOFR

March 17, 2023

March 17, 2026

​

$

75,000

​

​

1,438

​

​

N/A

Term Loan 1

Swap

3.931

%

CME Term SOFR

September 14, 2023

September 14, 2026

​

$

100,000

​

​

709

​

​

N/A

Term Loan 2

Swap

1.853

%

1-Month LIBOR

January 29, 2016

January 31, 2023

​

​

N/A

​

​

N/A

​

​

208

​

​

​

​

​

​

​

​

​

​

​

$

2,147

​

$

268

(1)In May 2023, the cap derivative was terminated in conjunction with the Company’s repayment of the loan secured by the Hilton San Diego Bayfront (see Note 6). The fair value of the cap derivative is included in prepaid expenses and other current assets on the accompanying consolidated balance sheet as of December 31, 2022. The Term Loan 1 swap derivatives are included in other assets on the accompanying consolidated balance sheet as of June 30, 2023. The fair value of the Term Loan 2 swap derivative is included in prepaid expenses and other current assets on the accompanying consolidated balance sheet as of December 31, 2022.
Schedule of changes in fair value of interest rate derivatives

Noncash changes in the fair values of the Company’s interest rate derivatives resulted in decreases to interest expense for the three and six months ended June 30, 2023 and 2022 as follows (unaudited and in thousands):

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Three Months Ended June 30,

​

Six Months Ended June 30,

​

​

​

2023

​

2022

​

2023

​

2022

​

Noncash interest on derivatives, net

​

$

(3,711)

​

$

(1,023)

​

$

(1,879)

​

$

(2,865)

​
v3.23.2
Other Assets (Tables)
 6 Months Ended
Jun. 30, 2023
Other Assets.  
Schedule of other assets

Other assets, net consisted of the following (in thousands):

​

​

​

​

​

​

​

​

​

​

June 30,

​

December 31,

​

    

2023

    

2022

​

​

(unaudited)

​

​

​

Property and equipment, net

​

$

3,514

​

$

3,685

Deferred rent on straight-lined third-party tenant leases

​

​

2,289

​

​

2,413

Liquor licenses

​

​

930

​

​

933

Interest rate swap derivatives

​

​

2,147

​

​

—

Other

​

​

439

​

​

836

Total other assets, net

​

$

9,319

​

$

7,867
v3.23.2
Notes Payable (Tables)
 6 Months Ended
Jun. 30, 2023
Debt Disclosures  
Schedule of notes payable

Notes payable consisted of the following (in thousands):

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Balance Outstanding as of

​

​

​

​

Interest Rate

​

​

​

June 30,

​

December 31,

​

​

Rate Type

​

at June 30, 2023

​

Maturity Date

​

2023

​

2022

​

​

​

​

​

​

​

​

(unaudited)

​

​

​

Mortgage Loans

​

​

​

​

​

​

​

​

​

​

​

​

Hilton San Diego Bayfront

​

Partially fixed

(1)

N/A

​

December 9, 2023

​

$

—

​

$

220,000

JW Marriott New Orleans

​

Fixed

​

4.15

%

December 11, 2024

​

​

75,100

​

​

76,136

Total mortgage loans

​

​

​

​

​

​

​

$

75,100

​

$

296,136

Unsecured Corporate Credit Facilities

​

​

​

​

​

​

​

​

​

​

​

​

Term Loan 1

​

Partially fixed

(2)

5.94

%

July 25, 2027

​

$

175,000

​

$

175,000

Term Loan 2

​

Variable

(3)

6.59

%

January 25, 2028

​

​

175,000

​

​

175,000

Term Loan 3

​

Variable

(4)

6.59

%

May 1, 2025

​

​

225,000

​

​

—

Total unsecured corporate credit facilities

​

​

​

​

​

​

​

$

575,000

​

$

350,000

Unsecured Senior Notes

​

​

​

​

​

​

​

​

​

​

​

​

Series A

​

Fixed

​

4.69

%

January 10, 2026

​

$

65,000

​

$

65,000

Series B

​

Fixed

​

4.79

%

January 10, 2028

​

​

105,000

​

​

105,000

Total unsecured senior notes

​

​

​

​

​

​

​

$

170,000

​

$

170,000

Total notes payable

​

​

​

​

​

​

​

$

820,100

​

$

816,136

(1)The mortgage loan secured by the Hilton San Diego Bayfront was repaid on May 9, 2023, using proceeds received from the Company’s Term Loan 3. The mortgage loan was subject to an interest rate cap derivative (see Note 4). The effective interest rate on the loan was 5.571% at December 31, 2022.
(2)Term Loan 1 is subject to two interest rate swap derivatives (see Note 4). The variable interest rate is based on a pricing grid with a range of 1.35% to 2.20%, depending on the Company’s leverage ratios, plus SOFR and a 0.10% adjustment. In May 2023, the pricing grid was reduced by 0.02% to a range of 1.33% to 2.18% as the Company achieved the 2022 sustainability performance metric specified in the Second Amended Credit Agreement. The reduction in the pricing grid will be evaluated annually and is subject to the Company’s continued ability to satisfy its sustainability metric. The effective interest rates on the term loan were 5.94% and 5.82% at June 30, 2023 and December 31, 2022, respectively.
(3)Term Loan 2 was subject to an interest rate swap derivative until the swap expired in January 2023 (see Note 4). The variable interest rate is based on a pricing grid with a range of 1.35% to 2.20%, depending on the Company’s leverage ratios, plus SOFR and a 0.10% adjustment. In May 2023, the pricing grid was reduced by 0.02% to a range of 1.33% to 2.18% as the Company achieved the 2022 sustainability performance metric specified in the Second Amended Credit Agreement. The reduction in the pricing grid will be evaluated annually and is subject to the Company’s continued ability to satisfy its sustainability metric. The effective interest rates on the term loan were 6.59% and 4.27% at June 30, 2023 and December 31, 2022, respectively.
(4)On May 1, 2023, the Company entered into a term loan agreement (“Term Loan 3”) and drew a total of $225.0 million, of which $220.0 million was used to repay the mortgage loan secured by the Hilton San Diego Bayfront. The variable interest rate is based on a pricing grid with a range of 1.35% to 2.20%, depending on the Company’s leverage ratios, plus SOFR and a 0.10% adjustment. Term Loan 3 matures on May 1, 2025, with a one-time option to extend the loan by twelve months to May 1, 2026 upon the payment of applicable fees and the satisfaction of certain customary conditions. The Company also has the right to increase Term Loan 3 in an amount up to $50.0 million, for an aggregate facility of $275.0 million from lenders that are willing at such time to provide such increase. The effective interest rate on the term loan was 6.59% at June 30, 2023.
Schedule of carrying values of notes payable

Notes payable on the Company’s accompanying consolidated balance sheets are presented net of deferred financing costs as follows (in thousands):

​

​

​

​

​

​

​

​

​

​

June 30,

​

December 31,

​

    

2023

    

2022

​

​

(unaudited)

​

​

​

Current portion of notes payable

​

$

2,122

​

$

222,086

Less: current portion of deferred financing costs

​

​

(57)

​

​

(56)

Carrying value of current portion of notes payable

​

$

2,065

​

$

222,030

​

​

​

​

​

​

​

Notes payable, less current portion

​

$

817,978

​

$

594,050

Less: long-term portion of deferred financing costs

​

 

(5,212)

​

 

(3,399)

Carrying value of notes payable, less current portion

​

$

812,766

​

$

590,651
Schedule of interest expense

​

Total interest incurred and expensed on the notes payable and finance lease obligation was as follows (unaudited and in thousands):

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Three Months Ended June 30,

​

Six Months Ended June 30,

​

    

2023

    

2022

    

2023

    

2022

Interest expense on debt and finance lease obligation

​

$

12,259

​

$

6,290

​

$

23,676

​

$

12,533

Noncash interest on derivatives, net

​

​

(3,711)

​

​

(1,023)

​

​

(1,879)

​

​

(2,865)

Amortization of deferred financing costs

​

​

675

​

​

671

​

​

1,220

​

​

1,351

Total interest expense

​

$

9,223

​

$

5,938

​

$

23,017

​

$

11,019
v3.23.2
Other Current Liabilities and Other Liabilities (Tables)
 6 Months Ended
Jun. 30, 2023
Other Current Liabilities and Other Liabilities  
Schedule of other current liabilities

Other current liabilities consisted of the following (in thousands):

​

​

​

​

​

​

​

​

​

​

June 30,

​

December 31,

​

    

2023

    

2022

​

​

(unaudited)

​

​

​

Property, sales and use taxes payable

​

$

10,582

​

$

7,500

Accrued interest

​

​

6,260

​

​

6,915

Advance deposits

​

​

44,088

​

​

44,224

Management fees payable

​

​

1,329

​

​

1,584

Other

​

​

4,222

​

​

4,990

Total other current liabilities

​

$

66,481

​

$

65,213
Schedule of other liabilities

Other liabilities consisted of the following (in thousands):

​

​

​

​

​

​

​

​

​

​

June 30,

​

December 31,

​

    

2023

    

2022

​

​

(unaudited)

​

​

​

Deferred revenue

​

$

7,000

​

$

6,088

Deferred rent

​

​

2,065

​

​

2,718

Other

​

​

2,079

​

​

3,151

Total other liabilities

​

$

11,144

​

$

11,957
v3.23.2
Leases (Tables)
 6 Months Ended
Jun. 30, 2023
Leases  
Schedule of supplemental balance sheet information related to leases

Operating leases were included on the Company’s consolidated balance sheets as follows (in thousands):

​

​

​

​

​

​

​

​

​

​

​

June 30,

​

December 31,

​

​

​

2023

​

2022

​

​

​

(unaudited)

​

​

​

​

Right-of-use assets, net

​

$

14,999

​

$

15,025

​

​

​

​

​

​

​

​

​

Accounts payable and accrued expenses

​

$

4,745

​

$

4,652

​

Lease obligations, less current portion

​

​

14,267

​

​

14,360

​

Total lease obligations

​

$

19,012

​

$

19,012

​

​

​

​

​

​

​

​

​

Weighted average remaining lease term

​

​

33 years

​

​

​

​

Weighted average discount rate

​

​

5.3

%

​

​

​
Lease costs

The components of lease expense were as follows (unaudited and in thousands):

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Three Months Ended June 30,

​

Six Months Ended June 30,

​

​

2023

​

2022

​

2023

​

2022

Finance lease cost (1):

​

​

​

​

​

​

​

​

​

​

​

​

Interest on lease obligation

​

$

—

​

$

—

​

$

—

​

$

117

Operating lease cost

​

​

1,349

​

​

1,327

​

​

2,708

​

​

2,716

Variable lease cost (2)

​

​

2,197

​

​

1,978

​

​

4,283

​

​

2,859

Sublease income (3)

​

​

(297)

​

​

—

​

​

(594)

​

​

—

Total lease cost

​

$

3,249

​

$

3,305

​

$

6,397

​

$

5,692

(1)Finance lease cost for the three months ended June 30, 2022 included expenses for the Hyatt Centric Chicago Magnificent Mile’s finance lease obligation before the hotel’s sale in February 2022.
(2)Several of the Company’s hotels pay percentage rent, which is calculated on operating revenues above certain thresholds.
(3)During the fourth quarter of 2022, the Company entered into a sublease agreement on its previous corporate headquarters, which became effective in January 2023. Sublease income is included in corporate overhead in the accompanying consolidated statement of operations for the three and six months ended June 30, 2023.
v3.23.2
Stockholders' Equity (Tables)
 6 Months Ended
Jun. 30, 2023
Stockholders' Equity  
Schedule of repurchases of common and preferred stock

Details of the Company’s repurchases were as follows (dollars in thousands):

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Three Months Ended June 30,

​

Six Months Ended June 30,

​

​

2023

​

2022

​

2023

​

2022

Number of common shares repurchased

​

​

301,461

​

​

3,235,958

​

​

2,266,384

​

​

7,114,983

Cost, including fees and commissions

​

$

2,855

​

$

34,515

​

$

21,481

​

$

77,980

Number of preferred shares repurchased

​

​

—

​

​

—

​

​

—

​

​

—
v3.23.2
Incentive Award Plan (Tables)
 6 Months Ended
Jun. 30, 2023
Schedule of amortization expense and forfeitures related to restricted shares

As of both June 30, 2023 and 2022, the Company’s issued and outstanding awards consisted of both time-based and performance-based restricted stock grants. The Company’s amortization expense, including forfeitures related to restricted shares was as follows (unaudited and in thousands):

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Three Months Ended June 30,

​

Six Months Ended June 30,

​

    

2023

    

2022

    

2023

    

2022

Amortization expense, including forfeitures

​

$

3,325

​

$

2,853

​

$

5,752

​

$

6,431

​

​

​

​

​

​

​

​

​

​

​

​

​

Capitalized compensation cost (1)

​

$

117

​

$

118

​

$

235

​

$

241

(1)The Company capitalizes compensation costs related to restricted shares granted to certain employees whose work is directly related to the Company’s capital investment in its hotels.
Restricted Stock [Member]  
Schedule of non-vested restricted stock grant activity

The Company’s restricted stock awards are time-based restricted shares that generally vest over periods ranging from three years to five years from the date of grant. The following is a summary of non-vested restricted stock award activity for the six months ended June 30, 2023:

​

​

​

​

​

​

​

​

    

​

    

Weighted-Average

​

​

​

​

Grant Date

​

​

Number of Shares

​

Fair Value

Unvested at January 1, 2023

 

1,289,146

​

$

11.65

Granted

 

450,964

​

$

10.58

Vested

 

(699,652)

​

$

11.76

Forfeited

 

(7,894)

​

$

11.14

Unvested at June 30, 2023

 

1,032,564

​

$

11.11
Performance Shares [Member]  
Schedule of non-vested restricted stock grant activity

The Company’s restricted stock units are performance-based restricted shares that generally vest based on the Company’s total relative shareholder return and the achievement of pre-determined stock price targets during performance periods ranging from two years to five years. The following is a summary of non-vested restricted stock unit activity, at target performance, for the six months ended June 30, 2023:

​

​

​

​

​

​

​

​

    

​

    

Weighted-Average

​

​

Target Number

​

Grant Date

​

​

of Shares

​

Fair Value

Unvested at January 1, 2023

 

612,584

​

$

10.40

Granted

 

463,576

​

$

11.07

Unvested at June 30, 2023

 

1,076,160

​

$

10.69
Schedule of share based payment award performance awards valuation assumptions

The restricted stock units granted during the first six months of 2023 vest based on the Company’s total relative shareholder return following a three year performance period. The number of shares that may become vested ranges from zero to 200%. The grant date fair values of the restricted stock units were determined using a Monte Carlo simulation model with the following assumptions:

​

​

​

​

​

Expected volatility

​

38.0

%

Dividend yield (1)

​

—

​

Risk-free rate

​

4.18

%

Expected term

​

3 years

​

(1)Dividend equivalents are assumed to be reinvested in shares of the Company’s common stock and dividend equivalents will only be paid to the extent the award vests.
v3.23.2
Commitments and Contingencies (Tables)
 6 Months Ended
Jun. 30, 2023
Commitments and Contingencies  
Schedule of basic and incentive management fees

Total basic management and incentive management fees were included in other property-level expenses on the Company’s consolidated statements of operations as follows (unaudited and in thousands):

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Three Months Ended June 30,

​

Six Months Ended June 30,

​

    

2023

    

2022

    

2023

    

2022

Basic management fees

​

$

7,599

​

$

6,946

​

$

14,327

​

$

11,615

Incentive management fees

​

​

2,415

​

​

3,067

​

​

5,942

​

​

4,625

Total basic and incentive management fees

​

$

10,014

​

$

10,013

​

$

20,269

​

$

16,240
Schedule of license and franchise costs

Total license and franchise fees were included in franchise costs on the Company’s consolidated statements of operations as follows (unaudited and in thousands):

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Three Months Ended June 30,

​

Six Months Ended June 30,

​

    

2023

    

2022

    

2023

    

2022

Franchise assessments (1)

​

$

4,206

​

$

3,969

​

$

7,817

​

$

6,687

Franchise royalties

​

​

354

​

​

311

​

​

661

​

​

597

Total franchise costs

​

$

4,560

​

$

4,280

​

$

8,478

​

$

7,284

(1)Includes advertising, reservation and frequent guest program assessments.
Schedule of hotel geographic concentration of risk

As of June 30, 2023, 11 of the 15 Hotels were geographically concentrated as follows (unaudited):

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Trailing 12-Month

​

​

​

​

​

Percentage of

​

Total Consolidated

​

​

    

Number of Hotels

    

Total Rooms

    

Revenue

    

California

​

5

​

34

%  

39

%  

Florida

​

3

​

17

%  

16

%  

Hawaii

​

1

​

7

%  

16

%  

Massachusetts

​

2

​

19

%  

17

%  
v3.23.2
Organization and Description of Business (Details)
 6 Months Ended
Jun. 30, 2023
property
Organization and Description of Business  
Number of hotels owned by the Company 15
Sunstone Hotel Partnership, LLC  
Organization and Description of Business  
Controlling interest owned (as a percent) 100.00%
Marriott  
Organization and Description of Business  
Number of hotels owned by the Company 6
Hyatt Corporation  
Organization and Description of Business  
Number of hotels owned by the Company 2
Four Seasons Hotels Limited  
Organization and Description of Business  
Number of hotels owned by the Company 1
Highgate Hotels L.P. and an affiliate  
Organization and Description of Business  
Number of hotels owned by the Company 1
Hilton Worldwide  
Organization and Description of Business  
Number of hotels owned by the Company 1
Interstate Hotels & Resorts, Inc  
Organization and Description of Business  
Number of hotels owned by the Company 1
Montage North America, LLC  
Organization and Description of Business  
Number of hotels owned by the Company 1
Sage Hospitality Group  
Organization and Description of Business  
Number of hotels owned by the Company 1
Singh Hospitality, LLC  
Organization and Description of Business  
Number of hotels owned by the Company 1
v3.23.2
Summary of Significant Accounting Policies - (Details)
 1 Months Ended 3 Months Ended 6 Months Ended
May 31, 2023
USD ($)
Jun. 30, 2023
USD ($)
property
Jun. 30, 2022
USD ($)
property
Jun. 30, 2023
USD ($)
property
Jun. 30, 2022
USD ($)
property
Dec. 31, 2022
USD ($)
Dec. 31, 2020
USD ($)
Investments in Hotel Properties              
Number of hotels impaired | property   0 0 0 0    
Leases              
Leases Initial Maximum Term Not Recorded On Balance Sheet       12 months      
Leases Initial Minimum Term Recorded Right Of Use Assets       12 months      
Number of hotels with operating lease right-of-use asset impairment | property   0 0 0 0    
Revenue Recognition              
Trade receivables, net   $ 25,211,000   $ 25,211,000   $ 19,751,000  
Contract liabilities   51,010,000   51,010,000   50,219,000  
Deferred revenue recognized   11,400,000 $ 8,600,000 $ 38,900,000 $ 22,400,000    
Segment Reporting              
Number of operating segments       1 1    
Financial standby letter of credit              
Restricted Cash              
Restricted Cash   $ 200,000   $ 200,000   200,000  
Franchise fees | Minimum              
Investments in Hotel Properties              
Estimated useful life   15 years   15 years      
Franchise fees | Maximum              
Investments in Hotel Properties              
Estimated useful life   20 years   20 years      
Buildings and improvements | Minimum              
Investments in Hotel Properties              
Estimated useful life for property, plant and equipment   5 years   5 years      
Buildings and improvements | Maximum              
Investments in Hotel Properties              
Estimated useful life for property, plant and equipment   40 years   40 years      
Furniture, fixtures and equipment | Minimum              
Investments in Hotel Properties              
Estimated useful life for property, plant and equipment   3 years   3 years      
Furniture, fixtures and equipment | Maximum              
Investments in Hotel Properties              
Estimated useful life for property, plant and equipment   12 years   12 years      
Hilton San Diego Bayfront [Member]              
Accounting Standards Update and Change in Accounting Principle [Abstract]              
Repayment of mortgage debt $ 220,000,000.0            
Hilton Times Square              
Restricted Cash              
Restricted Cash   $ 300,000   $ 300,000   10,200,000 $ 11,600,000
Four Seasons Resort Napa Valley              
Restricted Cash              
Restricted Cash           $ 3,100,000  
v3.23.2
Summary of Significant Accounting Policies - Earnings Per Share (Details) - USD ($)
$ / shares in Units, $ in Thousands
 3 Months Ended 6 Months Ended
Jun. 30, 2023
Mar. 31, 2023
Jun. 30, 2022
Mar. 31, 2022
Jun. 30, 2023
Jun. 30, 2022
Numerator:            
Net Income $ 43,078 $ 21,087 $ 37,692 $ 15,123 $ 64,165 $ 52,815
Income from consolidated joint venture attributable to noncontrolling interest     (2,343)     (3,477)
Preferred stock dividends (3,768)   (3,773)   (7,536) (7,546)
Distributions paid to participating securities (52)       (104)  
Undistributed income allocated to participating securities (144)   (266)   (194) (327)
Numerator for basic and diluted income attributable to common stockholders $ 39,114   $ 31,310   $ 56,331 $ 41,465
Denominator:            
Weighted average basic common shares outstanding (in shares) 206,181,000   213,183,000   206,606,000 215,216,000
Unvested restricted stock units 647,000       489,000  
Weighted average diluted common shares outstanding (in shares) 206,828,000   213,183,000   207,095,000 215,216,000
Basic income attributable to common stockholders per common share (in dollars per share) $ 0.19   $ 0.15   $ 0.27 $ 0.19
Diluted income attributable to common stockholders per common share (in dollars per share) $ 0.19   $ 0.15   $ 0.27 $ 0.19
Restricted Stock [Member]            
Denominator:            
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount 1,032,564   1,289,146   1,032,564 1,289,146
Performance Shares [Member]            
Denominator:            
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount 188,004   188,004   188,004 188,004
v3.23.2
Investment in Hotel Properties (Details) - USD ($)
$ in Thousands
Jun. 30, 2023
Dec. 31, 2022
Land $ 672,623 $ 672,531
Buildings and improvements 2,808,999 2,793,771
Furniture, fixtures and equipment 432,326 426,189
Intangible assets 42,187 42,187
Construction in progress 104,398 71,689
Investment in hotel properties, gross 4,060,533 4,006,367
Accumulated depreciation and amortization (1,229,794) (1,165,439)
Investment in hotel properties, net $ 2,830,739 $ 2,840,928
v3.23.2
Fair Value Measurements and Interest Rate Derivatives - Fair Value of Debt (Details) - USD ($)
$ in Thousands
Jun. 30, 2023
Dec. 31, 2022
Percentage of Debt Bearing Fixed Interest Rates 51.20% 42.40%
Total notes payable $ 820,100 $ 816,136
Level 3    
Fair value of debt $ 801,197 $ 809,141
v3.23.2
Fair Value Measurements and Interest Rate Derivatives - Interest Rate Derivatives (Details) - USD ($)
$ in Thousands
 3 Months Ended 6 Months Ended 12 Months Ended
Jun. 30, 2023
Jun. 30, 2022
Jun. 30, 2023
Jun. 30, 2022
Dec. 31, 2022
Interest Rate Derivatives          
Fair value of interest rate derivatives, net $ 2,147   $ 2,147   $ 268
Fair values of derivative assets 2,147   2,147    
Noncash interest on derivatives, net $ (3,711) $ (1,023) $ (1,879) $ (2,865)  
Interest Rate Cap Derivative | Not designated as hedging instrument | Hilton San Diego Bayfront mortgage          
Interest Rate Derivatives          
Strike rate under interest rate cap agreement         6.00%
Interest rate, description of reference rate         one-month LIBOR
Interest rate derivative effective date         Dec. 09, 2022
Interest rate derivative maturity date         Dec. 09, 2023
Fair values of derivative assets         $ 60
Interest Rate Swap Derivative | Not designated as hedging instrument | Term loan #2          
Interest Rate Derivatives          
Fixed rate under interest rate swap agreement         1.853%
Interest rate, description of reference rate         one-month LIBOR
Interest rate derivative effective date         Jan. 29, 2016
Interest rate derivative maturity date         Jan. 31, 2023
Fair values of derivative assets         $ 208
Interest Rate Swap Derivative TL1 Swap1 Member | Not designated as hedging instrument | Term loan #1          
Interest Rate Derivatives          
Fixed rate under interest rate swap agreement 3.675%   3.675%    
Interest rate, description of reference rate     CME Term SOFR    
Interest rate derivative effective date     Mar. 17, 2023    
Interest rate derivative maturity date     Mar. 17, 2026    
Notional amount $ 75,000   $ 75,000    
Fair values of derivative assets $ 1,438   $ 1,438    
Interest Rate Swap Derivative TL1 Swap2 Member | Not designated as hedging instrument | Term loan #1          
Interest Rate Derivatives          
Fixed rate under interest rate swap agreement 3.931%   3.931%    
Interest rate, description of reference rate     CME Term SOFR    
Interest rate derivative effective date     Sep. 14, 2023    
Interest rate derivative maturity date     Sep. 14, 2026    
Notional amount $ 100,000   $ 100,000    
Fair values of derivative assets $ 709   $ 709    
v3.23.2
Other Assets (Details) - USD ($)
$ in Thousands
Jun. 30, 2023
Dec. 31, 2022
Other assets, net    
Property and equipment, net $ 3,514 $ 3,685
Deferred rent on straight-lined third-party tenant leases 2,289 2,413
Liquor licenses 930 933
Interest rate derivative assets 2,147  
Other 439 836
Total other assets, net $ 9,319 $ 7,867
v3.23.2
Notes Payable (Details)
 1 Months Ended 2 Months Ended 3 Months Ended 6 Months Ended 12 Months Ended
May 31, 2023
USD ($)
Apr. 30, 2023
Jun. 30, 2023
USD ($)
Mar. 31, 2023
Jun. 30, 2023
USD ($)
Dec. 31, 2022
USD ($)
Notes Payable            
Total notes payable     $ 820,100,000   $ 820,100,000 $ 816,136,000
Current portion of notes payable     2,122,000   2,122,000 222,086,000
Less: current portion of deferred financing costs     (57,000)   (57,000) (56,000)
Current portion of notes payable, net     2,065,000   2,065,000 222,030,000
Notes payable, less current portion     817,978,000   817,978,000 594,050,000
Less: long-term portion of deferred financing costs     (5,212,000)   (5,212,000) (3,399,000)
Carrying value of notes payable, less current portion     812,766,000   812,766,000 590,651,000
Mortgages [Member]            
Notes Payable            
Outstanding balance of secured debt     $ 75,100,000   $ 75,100,000 $ 296,136,000
Hilton San Diego Bayfront Mortgage            
Notes Payable            
Total interest rate, including effect of derivative           5.571%
Debt maturity date           Dec. 09, 2023
Outstanding balance of secured debt           $ 220,000,000
Repayment of mortgage debt $ 220,000,000.0          
JW Marriott New Orleans Mortgage            
Notes Payable            
Debt maturity date         Dec. 11, 2024 Dec. 11, 2024
Fixed interest rate (as a percent)     4.15%   4.15%  
Outstanding balance of secured debt     $ 75,100,000   $ 75,100,000 $ 76,136,000
Unsecured Term Loans            
Notes Payable            
Outstanding balance of unsecured debt     $ 575,000,000   $ 575,000,000 $ 350,000,000
Term loan #1            
Notes Payable            
Debt maturity date         Jul. 25, 2027 Jul. 25, 2027
Increase (decrease) in interest rate (as a percent) (0.02%)          
Number of interest rate swap derivative agreements     2   2  
Outstanding balance of unsecured debt     $ 175,000,000   $ 175,000,000 $ 175,000,000
Line of Credit Facility, Interest Rate at Period End     5.94%   5.94% 5.82%
Term loan #1 | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate [Member]            
Notes Payable            
Interest rate, description of reference rate         SOFR SOFR
Interest rate added to base rate (as a percent)         0.10% 0.10%
Term loan #1 | Minimum            
Notes Payable            
Interest rate added to base rate (as a percent)   1.35% 1.33% 1.35%   1.35%
Term loan #1 | Maximum            
Notes Payable            
Interest rate added to base rate (as a percent)   2.20% 2.18% 2.20%   2.20%
Term loan #2            
Notes Payable            
Debt maturity date         Jan. 25, 2028 Jan. 25, 2028
Increase (decrease) in interest rate (as a percent) (0.02%)          
Outstanding balance of unsecured debt     $ 175,000,000   $ 175,000,000 $ 175,000,000
Line of Credit Facility, Interest Rate at Period End     6.59%   6.59% 4.27%
Term loan #2 | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate [Member]            
Notes Payable            
Interest rate, description of reference rate         SOFR SOFR
Interest rate added to base rate (as a percent)         0.10% 0.10%
Term loan #2 | Not designated as hedging instrument | Interest Rate Swap Derivative            
Notes Payable            
Interest rate, description of reference rate           one-month LIBOR
Fixed rate under interest rate swap agreement           1.853%
Term loan #2 | Minimum            
Notes Payable            
Interest rate added to base rate (as a percent)   1.35% 1.33% 1.35%   1.35%
Term loan #2 | Maximum            
Notes Payable            
Interest rate added to base rate (as a percent)   2.20% 2.18% 2.20%   2.20%
Term loan #3            
Notes Payable            
Debt maturity date     May 01, 2025      
Number of extension periods for unsecured debt 1          
Term of extension period for unsecured debt 12 months          
Credit facility expiration date after extensions May 01, 2026          
Line of Credit Facility, Borrowing Capacity, Description     The Company also has the right to increase Term Loan 3 in an amount up to $50.0 million, for an aggregate facility of $275.0 million from lenders that are willing at such time to provide such increase      
Outstanding balance of unsecured debt     $ 225,000,000   $ 225,000,000  
Line of Credit Facility, Interest Rate at Period End     6.59%   6.59%  
Proceeds from draw on revolving credit facility $ 225,000,000.0          
Maximum borrowing capacity for unsecured revolving credit facility 275,000,000.0          
Line of Credit Additional Borrowing Capacity $ 50,000,000.0          
Term loan #3 | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate [Member]            
Notes Payable            
Interest rate, description of reference rate     SOFR      
Interest rate added to base rate (as a percent)     0.10%      
Term loan #3 | Minimum            
Notes Payable            
Interest rate added to base rate (as a percent)     1.35%      
Term loan #3 | Maximum            
Notes Payable            
Interest rate added to base rate (as a percent)     2.20%      
Senior Notes            
Notes Payable            
Outstanding balance of unsecured debt     $ 170,000,000   $ 170,000,000 $ 170,000,000
Series A Senior Notes            
Notes Payable            
Debt maturity date         Jan. 10, 2026 Jan. 10, 2026
Fixed interest rate (as a percent)     4.69%   4.69%  
Outstanding balance of unsecured debt     $ 65,000,000   $ 65,000,000 $ 65,000,000
Series B Senior Notes            
Notes Payable            
Debt maturity date         Jan. 10, 2028 Jan. 10, 2028
Fixed interest rate (as a percent)     4.79%   4.79%  
Outstanding balance of unsecured debt     $ 105,000,000   $ 105,000,000 $ 105,000,000
Senior unsecured revolving credit facility            
Notes Payable            
Outstanding indebtedness under credit facility     0   0  
Maximum borrowing capacity for unsecured revolving credit facility     $ 500,000,000.0   $ 500,000,000.0  
v3.23.2
Notes Payable - Interest Expense (Details) - USD ($)
$ in Thousands
 3 Months Ended 6 Months Ended
Jun. 30, 2023
Jun. 30, 2022
Jun. 30, 2023
Jun. 30, 2022
Debt Disclosures        
Payments of deferred financing costs     $ 2,332  
Gain (loss) on extinguishment of debt, net $ 12 $ 21 9,921 $ (192)
Interest Expense        
Interest expense on debt and finance lease obligation 12,259 6,290 23,676 12,533
Noncash interest on derivatives, net (3,711) (1,023) (1,879) (2,865)
Amortization of deferred financing costs 675 671 1,220 1,351
Total interest expense $ 9,223 $ 5,938 $ 23,017 $ 11,019
v3.23.2
Other Current Liabilities and Other Liabilities (Details) - USD ($)
$ in Thousands
Jun. 30, 2023
Dec. 31, 2022
Other Current Liabilities    
Property, sales and use taxes payable $ 10,582 $ 7,500
Accrued interest 6,260 6,915
Advance deposits 44,088 44,224
Management fees payable 1,329 1,584
Other 4,222 4,990
Total other current liabilities 66,481 65,213
Other Liabilities    
Deferred revenue 7,000 6,088
Deferred rent 2,065 2,718
Other 2,079 3,151
Total other liabilities $ 11,144 $ 11,957
v3.23.2
Leases - Supplemental Balance Sheet Information Related to Leases (Details) - USD ($)
$ in Thousands
 1 Months Ended 6 Months Ended
Jan. 31, 2023
Jun. 30, 2023
Dec. 31, 2022
Jun. 30, 2022
Finance Lease        
Assignment of finance lease right-of-use asset in connection with sale of hotel       $ 44,712
Assignment of finance lease obligation in connection with sale of hotel       15,569
Operating Leases        
Operating lease right-of-use assets, net   $ 14,999 $ 15,025  
Operating lease obligations, current   $ 4,745 $ 4,652  
Accounts payable and accrued expenses   Accounts payable and accrued expenses Accounts payable and accrued expenses  
Operating lease obligations, less current portion   $ 14,267 $ 14,360  
Total operating lease obligations   $ 19,012 $ 19,012  
Weighted average remaining operating lease term   33 years    
Weighted average operating lease discount rate   5.30%    
Operating lease right-of-use asset obtained in exchange for operating lease obligation $ 2,200 $ 2,163    
Assignment of operating lease right-of-use asset in connection with sale of hotel       2,275
Assignment of operating lease obligation in connection with sale of hotel       $ 2,609
v3.23.2
Leases - Components of Lease Cost (Details) - USD ($)
$ in Thousands
 3 Months Ended 6 Months Ended
Jun. 30, 2023
Jun. 30, 2022
Jun. 30, 2023
Jun. 30, 2022
Lease Cost        
Interest on lease obligation       $ 117
Operating lease cost $ 1,349 $ 1,327 $ 2,708 2,716
Variable lease cost 2,197 1,978 4,283 2,859
Sublease income (297)   (594)  
Total lease cost $ 3,249 $ 3,305 $ 6,397 $ 5,692
v3.23.2
Stockholders' Equity - Preferred Stock (Details) - $ / shares
 1 Months Ended 12 Months Ended
Jun. 30, 2023
Dec. 31, 2022
Jul. 31, 2021
May 31, 2021
Apr. 30, 2021
Dec. 31, 2024
Series G Cumulative Redeemable Preferred Stock            
Stockholders' equity            
Preferred stock, Cumulative Redeemable Preferred Stock, shares outstanding (in shares) 2,650,000 2,650,000        
Liquidation preference (in dollars per share) $ 25.00 $ 25.00        
Series G Cumulative Redeemable Preferred Stock | Montage Healdsburg            
Stockholders' equity            
Redemption price (in dollars per share)         $ 25.00  
Number of shares of preferred stock issued (in shares)         2,650,000  
Series G Cumulative Redeemable Preferred Stock | Maximum | Montage Healdsburg            
Stockholders' equity            
Preferred stock, Cumulative Redeemable Preferred Stock, dividend rate (as a percent)           3.00%
Series H Cumulative Redeemable Preferred Stock            
Stockholders' equity            
Preferred stock, Cumulative Redeemable Preferred Stock, dividend rate (as a percent) 6.125% 6.125%   6.125%    
Redemption price (in dollars per share)       $ 25.00    
Preferred stock, Cumulative Redeemable Preferred Stock, shares outstanding (in shares) 4,600,000 4,600,000        
Number of shares of preferred stock issued (in shares)       4,600,000    
Liquidation preference (in dollars per share) $ 25.00 $ 25.00   $ 25.00    
Preferred stock redemption date       May 24, 2026    
Series I Cumulative Redeemable Preferred Stock            
Stockholders' equity            
Preferred stock, Cumulative Redeemable Preferred Stock, dividend rate (as a percent) 5.70% 5.70% 5.70%      
Redemption price (in dollars per share)     $ 25.00      
Preferred stock, Cumulative Redeemable Preferred Stock, shares outstanding (in shares) 4,000,000 4,000,000        
Number of shares of preferred stock issued (in shares)     4,000,000      
Liquidation preference (in dollars per share) $ 25.00 $ 25.00 $ 25.00      
Preferred stock redemption date     Jul. 16, 2026      
v3.23.2
Stockholders' Equity - Common Stock (Details) - USD ($)
$ in Thousands
 3 Months Ended 6 Months Ended
Jun. 30, 2023
Jun. 30, 2022
Jun. 30, 2023
Jun. 30, 2022
Mar. 31, 2023
Feb. 28, 2023
Feb. 28, 2021
Feb. 28, 2017
Share Repurchase Program                
Stockholders' equity                
Repurchase Program, number of shares repurchased (in shares) 301,461 3,235,958 2,266,384 7,114,983        
Repurchase Program, value of shares repurchased $ 2,855 $ 34,515 $ 21,481 $ 77,980        
Repurchase Program, remaining authorized capacity $ 489,500   $ 489,500          
Maximum | Share Repurchase Program                
Stockholders' equity                
Stock Repurchase Program, maximum amount authorized for repurchase           $ 500,000 $ 500,000  
Common Stock | At The Market                
Stockholders' equity                
ATM Program, number of shares sold or issued (in shares) 0 0 0 0        
ATM Program, remaining amount authorized for issuance $ 300,000   $ 300,000          
Common Stock | Maximum | At The Market                
Stockholders' equity                
ATM Program, maximum amount authorized for issuance         $ 300,000 $ 300,000   $ 300,000
v3.23.2
Incentive Award Plan (Details) - USD ($)
$ / shares in Units, $ in Thousands
 3 Months Ended 6 Months Ended
Jun. 30, 2023
Jun. 30, 2022
Jun. 30, 2023
Jun. 30, 2022
Compensation Expense and Forfeitures        
Capitalized compensation cost     $ 235 $ 241
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions and Methodology [Abstract]        
Share-Based Compensation Arrangement by Share-Based Payment Award, Fair Value Assumptions, Method Used     Monte Carlo simulation model  
Share-Based Compensation Arrangement by Share-Based Payment Award, Fair Value Assumptions, Expected Volatility Rate     38.00%  
Share-Based Compensation Arrangement by Share-Based Payment Award, Fair Value Assumptions, Risk Free Interest Rate     4.18%  
Share-Based Compensation Arrangement by Share-Based Payment Award, Fair Value Assumptions, Expected Term     3 years  
Restricted Stock [Member]        
Non-Vested Stock Grants, Number of Shares        
Outstanding at the beginning of the period (in shares)     1,289,146  
Granted (in shares)     450,964  
Vested (in shares)     (699,652)  
Forfeited (in shares)     (7,894)  
Outstanding at the end of the period (in shares) 1,032,564   1,032,564  
Non-Vested Stock Grants, Weighted Average Price        
Outstanding at the beginning of the period (in dollars per share)     $ 11.65  
Granted (in dollars per share)     10.58  
Vested (in dollars per share)     11.76  
Forfeited (in dollars per share)     11.14  
Outstanding at the end of the period (in dollars per share) $ 11.11   $ 11.11  
Restricted Stock [Member] | Minimum        
Incentive Award Plan        
Vesting period     3 years  
Restricted Stock [Member] | Maximum        
Incentive Award Plan        
Vesting period     5 years  
Performance Shares [Member]        
Non-Vested Stock Grants, Number of Shares        
Outstanding at the beginning of the period (in shares)     612,584  
Granted (in shares)     463,576  
Outstanding at the end of the period (in shares) 1,076,160   1,076,160  
Non-Vested Stock Grants, Weighted Average Price        
Outstanding at the beginning of the period (in dollars per share)     $ 10.40  
Granted (in dollars per share)     11.07  
Outstanding at the end of the period (in dollars per share) $ 10.69   $ 10.69  
Performance Shares [Member] | Minimum        
Incentive Award Plan        
Vesting period     2 years  
Share-Based Compensation Arrangement by Share-Based Payment Award, Award Vesting Rights, Percentage     0.00%  
Performance Shares [Member] | Maximum        
Incentive Award Plan        
Vesting period     5 years  
Share-Based Compensation Arrangement by Share-Based Payment Award, Award Vesting Rights, Percentage     200.00%  
Restricted Shares and Performance awards        
Compensation Expense and Forfeitures        
Amortization expense, including forfeitures $ 3,325 $ 2,853 $ 5,752 6,431
Capitalized compensation cost $ 117 $ 118 $ 235 $ 241
v3.23.2
Commitments and Contingencies - Management Fees, Franchise Costs and Renovation Commitments (Details) - USD ($)
$ in Thousands
 3 Months Ended 6 Months Ended
Jun. 30, 2023
Jun. 30, 2022
Jun. 30, 2023
Jun. 30, 2022
Basic and incentive management fees incurred        
Other property-level expenses $ 31,857 $ 30,391 $ 63,634 $ 54,301
License and Franchise Agreements        
Franchise assessments 4,206 3,969 7,817 6,687
Franchise royalties 354 311 661 597
Franchise costs 4,560 4,280 8,478 7,284
Basic management fees        
Basic and incentive management fees incurred        
Other property-level expenses 7,599 6,946 14,327 11,615
Incentive management fees        
Basic and incentive management fees incurred        
Other property-level expenses 2,415 3,067 5,942 4,625
Total basic and incentive management fees        
Basic and incentive management fees incurred        
Other property-level expenses 10,014 $ 10,013 $ 20,269 $ 16,240
Minimum        
Management Agreements        
Basic management fees (as a percent)     2.00%  
Maximum        
Management Agreements        
Basic management fees (as a percent)     3.00%  
Renovation and Construction Commitments        
Renovation and Construction Commitments        
Remaining construction commitments $ 49,600   $ 49,600  
v3.23.2
Commitments and Contingencies - Other Commitments and Concentration of Risk (Details)
 1 Months Ended 3 Months Ended 6 Months Ended 12 Months Ended 24 Months Ended
Jun. 30, 2023
USD ($)
property
Feb. 28, 2023
USD ($)
Jan. 31, 2023
USD ($)
Dec. 31, 2021
USD ($)
Jun. 30, 2023
USD ($)
property
Jun. 30, 2022
USD ($)
Jun. 30, 2023
USD ($)
property
Jun. 30, 2022
USD ($)
Jun. 30, 2023
USD ($)
property
Dec. 31, 2022
USD ($)
Dec. 31, 2020
USD ($)
Concentration of Risk                      
Number of hotels owned by the Company | property 15       15   15   15    
Loss Contingencies                      
Proceeds from property insurance               $ 4,369,000      
Gain on extinguishment of debt         $ 12,000 $ 21,000 $ 9,921,000 $ (192,000)      
Term of unsecured environmental indemnities             0 years        
Damage limitation of unsecured environmental indemnities             $ 0        
Hilton Times Square                      
Loss Contingencies                      
Loss contingency accrued balance $ 200,000       200,000   200,000   $ 200,000 $ 10,200,000  
Loss contingency payment                   1,000,000.0  
Loss contingency increase (decrease)   $ (9,800,000)                  
Restricted Cash 300,000       300,000   300,000   $ 300,000 10,200,000 $ 11,600,000
Gain on extinguishment of debt   $ 9,800,000     12,000   $ 9,900,000        
Loss Contingency, Settlement Agreement, Terms   In February 2023, the Company was relieved of an additional $9.8 million of the potential obligation and the funds were released from escrow to the Company                  
Four Seasons Resort Napa Valley                      
Loss Contingencies                      
Loss contingency increase (decrease)     $ (3,100,000) $ 3,100,000              
Restricted Cash                   3,100,000  
Loss Contingency, Settlement Agreement, Terms     In January 2023, Four Seasons released the $3.1 million to the Company and the Company agreed to provide an unconditional guaranty to Four Seasons for the full and prompt payment of all amounts payable by the Company to Four Seasons relating to employee liability.                
Number of rooms | Geographic Concentration Risk [Member] | California                      
Concentration of Risk                      
Concentration risk (as a percent)             34.00%        
Number of rooms | Geographic Concentration Risk [Member] | Florida                      
Concentration of Risk                      
Concentration risk (as a percent)             17.00%        
Number of rooms | Geographic Concentration Risk [Member] | Hawaii                      
Concentration of Risk                      
Concentration risk (as a percent)             7.00%        
Number of rooms | Geographic Concentration Risk [Member] | Massachusetts                      
Concentration of Risk                      
Concentration risk (as a percent)             19.00%        
Revenue generated by hotels | Geographic Concentration Risk [Member] | California                      
Concentration of Risk                      
Concentration risk (as a percent)                 39.00%    
Revenue generated by hotels | Geographic Concentration Risk [Member] | Florida                      
Concentration of Risk                      
Concentration risk (as a percent)                 16.00%    
Revenue generated by hotels | Geographic Concentration Risk [Member] | Hawaii                      
Concentration of Risk                      
Concentration risk (as a percent)                 16.00%    
Revenue generated by hotels | Geographic Concentration Risk [Member] | Massachusetts                      
Concentration of Risk                      
Concentration risk (as a percent)                 17.00%    
Financial standby letter of credit                      
Loss Contingencies                      
Restricted Cash 200,000       200,000   $ 200,000   $ 200,000 $ 200,000  
Outstanding irrevocable letters of credit 200,000       $ 200,000   200,000   $ 200,000    
Payments on credit facility             $ 0        
Hurricane | Insurance Claims [Member] | Hilton New Orleans St. Charles                      
Loss Contingencies                      
Proceeds from property insurance 3,700,000                    
Gain on business interruption insurance recovery $ 500,000                    
Hotel owned by the Company | Geographic Concentration Risk [Member] | California                      
Concentration of Risk                      
Number of hotels owned by the Company | property 5       5   5   5    
Hotel owned by the Company | Geographic Concentration Risk [Member] | Florida                      
Concentration of Risk                      
Number of hotels owned by the Company | property 3       3   3   3    
Hotel owned by the Company | Geographic Concentration Risk [Member] | Hawaii                      
Concentration of Risk                      
Number of hotels owned by the Company | property 1       1   1   1    
Hotel owned by the Company | Geographic Concentration Risk [Member] | Massachusetts                      
Concentration of Risk                      
Number of hotels owned by the Company | property 2       2   2   2    
v3.23.2
Insider Trading Arrangements
 3 Months Ended
Jun. 30, 2023
Trading Arrangements, by Individual  
Rule 10b5-1 Arrangement Adopted false
Non-Rule 10b5-1 Arrangement Adopted false
Rule 10b5-1 Arrangement Terminated false
Non-Rule 10b5-1 Arrangement Terminated false