What changed in this filing

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Item 2. Management’s Discussion and Analysis

2020-10-29 compared with 2020-07-30 · 80 added, 77 removed, 263 unchanged (37% of the section changed)

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The current and uncertain future impact of the COVID-19 pandemic, including its effect on the ability or desire of people to travel, is expected to continue to impact our results, operations, outlooks, plans, goals, growth, reputation, cash flows, liquidity and share price;

• as a result of the COVID-19 pandemic, we have suspended operations at most of our hotels and resorts, and if we are unable to recommence operations in the near-term, we may become out of compliance with maintenance covenants in certain of our debt facilities;

• as a result of the COVID-19 pandemic, we suspended operations at some of our hotels and resorts, and if we are unable to recommence operations in the near-term, we may become out of compliance with maintenance covenants in certain of our debt facilities;

• world events impacting the ability or desire of people to travel may lead to a decline in demand for hotels;

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• risks associated with redevelopment and repositioning projects, including delays and cost overruns;

• the other factors discussed under the heading "Risk Factors" in this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K for the year ended December 31, 2019.

• the other factors discussed under the heading "Risk Factors" in this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K for the year ended December 31, 2019 and under Item 8.01 of our Current Report on Form 8-K filed with the SEC on March 24, 2020.

Accordingly, there is no assurance that our expectations will be realized.

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Following the government mandates and health official recommendations, we temporarily suspended operations at a majority of our hotels and resorts and dramatically reduced staffing and expenses at the hotels that remain operational.

Travel restrictions have slowly eased in a few markets and leisure demand began to recover late in the second quarter.

As of June 30, 2020, 16 of our hotels were open with operations of the remaining 38 hotels still temporarily suspended.

Throughout the summer months, hotel industry demand improved from its historical lows seen in the second quarter, particularly as leisure customers sought to escape the confines of their homes and travel to safe, clean and trustworthy drive-to hotels and resorts that offer more space and outdoor experiences.

In the third quarter, our properties benefited from this trend, and we saw weekly improvements in hotel revenues, excluding Independence Day and Labor Day holiday weeks, which experienced outsized increases and meaningful rate increases over the prior year period.

We will continue to monitor business travel demand, which has seen a slight uptick in recent weeks, as we still anticipate group demand will be the slowest to return until there is clarity around a health and immunity solution for the country.

As of September 30, 2020, 35 of our hotels were open with operations of the remaining 18 hotels still temporarily suspended.

Subsequent to September 30, 2020, we re-opened 4 additional hotels and anticipate re-opening additional hotels when demand recovers.

COVID-19 has had a negative impact on our operations and financial results to date and we expect that the COVID-19 pandemic will continue to have a significant negative impact on our results of operations, financial position and cash flow for the remainder of 2020 and into 2021.

We cannot estimate when travel demand will recover.

As a result of this uncertainty, in March 2020, we fully drew down on our $650.0 million unsecured revolving credit facility, reduced the quarterly cash dividend on our common shares to one penny for the first quarter and second quarters of 2020 and likely the remainder of 2020, reduced planned capital expenditures, reduced the compensation of our executive officers, board of trustees and employees, and, working closely with our hotel operating partners, significantly reduced our hotels' operating expenses.

As a result of this uncertainty, in March 2020, we fully drew down on our $650.0 million unsecured revolving credit facility, reduced the quarterly cash dividend on our common shares to one penny, reduced planned capital expenditures, reduced the compensation of our executive officers, board of trustees and employees, and, working closely with our hotel operating partners, significantly reduced our hotels' operating expenses.

On June 29, 2020, we amended our existing credit facilities, term loan facilities and senior notes.

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Based on these amendments and the expense and cash flow reductions, we believe that we will have sufficient liquidity to meet our obligations for the next twelve months.

During the six months ended June 30, 2020, other significant transactions included:

• Sold two hotel properties for an aggregate sales price of $331.0 million and recognized a gain of $117.4 million.

During the nine months ended September 30, 2020, other significant transactions included:

• Sold three hotel properties for an aggregate sales price of $387.0 million and recognized a gain of $117.4 million.

• Recognized an impairment loss of $20.6 million for a retail component of a hotel.

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Hotel Operating Statistics

The following table represents the key same-property hotel operating statistics for our hotels for the three and six months ended June 30, 2020 and 2019.

For the three months ended June 30, For the six months ended June 30,

The following table represents the key same-property hotel operating statistics for our hotels for the three and nine months ended September 30, 2020 and 2019.

For the three months ended September 30, For the nine months ended September 30,

2020 2019 2020 2019

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Same-Property Total RevPAR $ 63.22 $ 327.44 $ 98.28 $ 315.98

While the operations of many of our hotels were temporarily suspended beginning in March 2020, the above schedule of hotel results for the three and six months ended June 30 includes information from all hotels owned as of June 30, 2020, except, for the first and second quarters in both 2020 and 2019, Hotel Zena Washington DC, formerly known as Donovan Hotel, because it was closed during the first and second quarters of 2020 for renovation.

While the operations of many of our hotels were temporarily suspended beginning in March 2020, the above schedule of hotel results for the three and nine months ended September 30 includes information from all hotels owned as of September 30, 2020, except, for the first and second quarters in both 2020 and 2019, Hotel Zena Washington DC, formerly known as Donovan Hotel, because it was closed during the first and second quarters of 2020 for renovation and for the third quarter in both 2020 and 2019, Union Station Hotel Nashville, Autograph Collection, because it was sold in the third quarter of 2020.

Non-GAAP Financial Measures

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By excluding the effect of real estate related depreciation and amortization including our share of the joint venture depreciation and amortization, gains (losses) from sales of real estate and impairments of real estate assets (including impairment of real estate related joint ventures), all of which are based on historical cost accounting and which may be of lesser significance in evaluating current performance, we believe that FFO provides investors a useful financial measure to evaluate our operating performance.

The following table reconciles net income (loss) to FFO and FFO available to common share and unit holders for the three and six months ended June 30, 2020 and 2019 (in thousands):

For the three months ended June 30, For the six months ended June 30,

The following table reconciles net income (loss) to FFO and FFO available to common share and unit holders for the three and nine months ended September 30, 2020 and 2019 (in thousands):

For the three months ended September 30, For the nine months ended September 30,

2020 2019 2020 2019

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The white paper issued by Nareit entitled “Earnings Before Interest, Taxes, Depreciation and Amortization for Real Estate” defines EBITDA re as net income or loss (computed in accordance with U.S.

GAAP), excluding interest expense, income tax, depreciation and amortization, gains or losses on the disposition of depreciated property (including gains or losses on change of control), impairment write-downs of depreciated property and of investments in unconsolidated affiliates caused by a decrease in value of depreciated property in the affiliate, and after comparable adjustments for our portion of these items related to unconsolidated affiliates.

GAAP), excluding interest expense, income tax, depreciation and amortization, gains or losses on the disposition of depreciated property (including gains or losses on change of control),

impairment write-downs of depreciated property and of investments in unconsolidated affiliates caused by a decrease in value of depreciated property in the affiliate, and after comparable adjustments for our portion of these items related to unconsolidated affiliates.

We believe that EBITDA and EBITDA re provide investors useful financial measures to evaluate our operating performance, excluding the impact of our capital structure (primarily interest expense) and our asset base (primarily depreciation and amortization).

The following table reconciles net income (loss) to EBITDA and EBITDA re for the three and six months ended June 30, 2020 and 2019 (in thousands):

For the three months ended June 30, For the six months ended June 30,

The following table reconciles net income (loss) to EBITDA and EBITDA re for the three and nine months ended September 30, 2020 and 2019 (in thousands):

For the three months ended September 30, For the nine months ended September 30,

2020 2019 2020 2019

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Results of Operations

At June 30, 2020 and 2019, we had 54 and 60, respectively, wholly owned properties and leasehold interests.

At September 30, 2020 and 2019, we had 53 and 57, respectively, wholly owned properties and leasehold interests.

All properties owned during these periods have been included in our results of operations during the respective periods since their dates of acquisition and through the dates of disposition, as applicable.

Based on when a property was acquired or disposed, operating results for certain properties are not comparable for the three months ended June 30, 2020 and 2019.

Based on when a property was acquired or disposed, operating results for certain properties are not comparable for the three months ended September 30, 2020 and 2019.

The properties listed in the table below are hereinafter referred to as "non-comparable properties" for the periods indicated and all other properties are referred to as "comparable properties":

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March 6, 2020

Comparison of the three months ended June 30, 2020 to the three months ended June 30, 2019

Revenues — Total hotel revenues decreased by $419.5 million, of which was $32.0 million was due to the non-comparable properties and the remaining decline was due to the decline in demand and suspension of operations since March 2020 as a result of the COVID-19 pandemic.

Union Station Hotel Nashville, Autograph Collection Nashville, TN July 29, 2020

Comparison of the three months ended September 30, 2020 to the three months ended September 30, 2019

Revenues — Total hotel revenues decreased by $346.6 million, of which $25.0 million was due to the non-comparable properties and the remaining decline was due to the decline in demand and suspension of operations since March 2020 as a result of the COVID-19 pandemic.

Hotel operating expenses — Total hotel operating expenses decreased by $176.5 million, of which $15.2 million was due to the non-comparable properties and the remaining decline was due to the decline in demand and suspension of operations since March 2020 as a result of the COVID-19 pandemic.

Depreciation and amortization — Depreciation and amortization expense increased by $2.2 million, due to additional assets added from renovations and offset by sold hotels.

Real estate taxes, personal property taxes, property insurance and ground rent — Real estate taxes, personal property taxes, property insurance and ground rent decreased by $3.5 million due to a decline in percentage ground rent which is based on a percentage of revenues.

General and administrative — General and administrative expenses decreased by $1.5 million primarily due to a decline in share-based compensation costs and reduction in compensation and other administrative costs as a result of the cost cutting program put in place in response to the COVID-19 pandemic.

General and administrative expenses consist of employee compensation costs, legal and professional fees, costs related to strategic transactions, insurance and other expenses.

(Gain) loss and other operating expenses — (Gain) loss and other operating expenses increased $0.3 million due to increases in franchise tax expenses in 2020.

In 2019, the Company incurred $0.8 million in hotel management transition expenses and had $0.5 million of business interruption insurance income.

Interest expense — Interest expense decreased by $4.6 million as a result of using proceeds from property sales to reduce outstanding debt since June 30, 2019 and a decrease in interest rates during the second quarter of 2020.

Depreciation and amortization — Depreciation and amortization expense decreased by $13.1 million due primarily to a decrease in assets resulting from the sales of hotels.

Real estate taxes, personal property taxes, property insurance and ground rent — Real estate taxes, personal property taxes, property insurance and ground rent decreased by $3.6 million primarily due to a decline in percentage ground rent which is based on a percentage of revenues.

General and administrative — General and administrative expenses decreased by $0.8 million primarily due to a decline in share-based compensation costs and reductions in compensation and other administrative costs as a result of the cost-cutting program put in place in response to the COVID-19 pandemic.

General and administrative expenses consist of employee compensation costs, legal and professional fees, insurance and other expenses.

Transaction costs — Transaction costs increased by $6.3 million due to additional transfer taxes paid in connection with the LaSalle merger.

(Gain) loss and other operating expenses — (Gain) loss and other operating expenses decreased $0.6 million primarily due to $0.8 million in hotel management transition expenses incurred in 2019 with so such expenses incurred in 2020.

Interest expense — Interest expense increased by $1.0 million as a result of increased borrowings compared to the same period in the prior year.

Other — Other income increased by $0.1 million due to interest income from higher cash balances from the drawdown on the unsecured revolving credit facility to enhance liquidity.

Income tax (expense) benefit — Income tax expense (benefit) changed from an expense of $(6.6) million to a benefit of $3.6 million due primarily to a decrease in taxable income of our TRS during the quarter resulting from the COVID-19 hotel suspensions compared to the same period in the prior year.

Non-controlling interests — Non-controlling interests represent the allocation of income or loss of our Operating Partnership to the common units held by the LTIP unit holders.

Comparison of the six months ended June 30, 2020 to the six months ended June 30, 2019

Income tax (expense) benefit — Income tax expense increased by $1.4 million due primarily to a valuation allowance recognized on our deferred tax assets in 2020.

As a result of the uncertainty around estimating future taxable income of our TRS, we have placed a valuation allowance on the net operating losses that are no longer more likely than not to be utilized.

Non-controlling interests — Non-controlling interests represent the allocation of income or loss of our Operating Partnership to the common units held by the LTIP and OP unit holders.

Comparison of the nine months ended September 30, 2020 to the nine months ended September 30, 2019

Revenues — Total hotel revenues decreased by $864.1 million, of which $80.9 million was due to the non-comparable properties and the remaining decline was due to the decline in demand and suspension of operations since March 2020 as a result of the COVID-19 pandemic.

Hotel operating expenses — Total hotel operating expenses decreased by $422.3 million, of which $48.4 million was due to the non-comparable properties and the remaining decline was due to the decline in demand and suspension of operations since March 2020 as a result of the COVID-19 pandemic offset by an increase of $10.7 million in expenses related to the suspended operations at the hotels.

Depreciation and amortization — Depreciation and amortization expense increased by $3.7 million, due to additional assets added from renovations and offset by sold hotels.

Real estate taxes, personal property taxes, property insurance and ground rent — Real estate taxes, personal property taxes, property insurance and ground rent decreased by $5.2 million due to a decline in percentage ground rent which is based on a percentage of revenues.

General and administrative — General and administrative expenses increased by $9.9 million primarily due to $16.0 million in share-based compensation costs relating to the cancellation of the retention LTIP unit awards and time-based service condition awards.

This was partially offset by transaction costs incurred in 2019 related to the LaSalle merger.

General and administrative expenses consist of employee compensation costs, legal and professional fees, costs related to strategic transactions, insurance and other expenses.

Depreciation and amortization — Depreciation and amortization expense decreased by $9.3 million due to a decrease in assets resulting from sold hotels.

Real estate taxes, personal property taxes, property insurance and ground rent — Real estate taxes, personal property taxes, property insurance and ground rent decreased by $8.8 million primarily due to a decline in percentage ground rent which is based on a percentage of revenues.

General and administrative — General and administrative expenses increased by $12.5 million primarily due to $16.0 million in share-based compensation costs relating to the cancellation of the retention LTIP unit awards and time-based service condition awards, offset by the cost cutting program put in place in response to COVID-19.

General and administrative expenses consist of employee compensation costs, legal and professional fees, insurance and other expenses.

Transaction costs — Transaction costs increased by $2.9 million due to additional transfer taxes paid in connection with the LaSalle merger.

Impairment loss — We recognized an impairment loss of $20.6 million related to a retail component of a hotel.

There was no comparable transaction in 2019.

(Gain) loss on sale of hotel properties — (Gain) loss on sale of hotel properties increased by $117.4 million from the sale of two properties.

There were no comparable transactions in 2019.

(Gain) loss on sale of hotel properties — (Gain) loss on sale of hotel properties increased by $117.4 million from the sale of three properties.

There was no comparable (gain) loss from disposed properties in 2019.

(Gain) loss and other operating expenses — (Gain) loss and other operating expenses decreased by $2.5 million due primarily to the $4.8 million in hotel management transition expense incurred in 2019.

Interest expense — Interest expense decreased by $10.4 million as a result of using proceeds from property sales to reduce outstanding debt since June 30, 2019 and a decrease in interest rates during the second quarter of 2020.

Interest expense — Interest expense decreased by $9.3 million as a result of using proceeds from property sales to reduce outstanding debt since September 30, 2019 in addition to a decrease in interest rates in 2020.

Other — Other income increased by $0.4 million due to interest income from higher cash balances from the drawdown on the unsecured revolving credit facility to enhance liquidity.

Income tax (expense) benefit — Income tax (expense) benefit changed from an expense of $(1.5) million to a benefit of $14.3 million due primarily to an increase in taxable loss of our TRS as a result of suspended operations at our hotels during the six months ended June 30, 2020 compared to the same period in the prior year.

Non-controlling interests — Non-controlling interests represent the allocation of income or loss of our Operating Partnership to the common units held by the LTIP unit holders.

Income tax (expense) benefit — Income tax (expense) benefit changed from an expense of $(5.9) million to a benefit of $8.5 million due primarily to an increase in taxable losses of our TRS as a result of suspended operations at our hotels during the nine months ended September 30, 2020 compared to the same period in the prior year.

Non-controlling interests — Non-controlling interests represent the allocation of income or loss of our Operating Partnership to the common units held by the LTIP and OP unit holders.

Critical Accounting Policies

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New Accounting Pronouncements Not Yet Implemented

See Note 2 to the accompanying consolidated financial statements for additional information relating to recently issued accounting pronouncements.

See Note 2, “Summary of Significant Accounting Policies,” to our consolidated interim financial statements for additional information relating to recently issued accounting pronouncements.

Liquidity and Capital Resources

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As travel demand slowly recovered during the second quarter, as of June 30, 2020, 16 of our hotels were open, while oeprations at the remaining 38 hotels were still temporarily suspended.

As travel demand slowly recovered during the third quarter, as of September 30, 2020, 35 of our hotels were open, while operations at the remaining 18 hotels were still temporarily suspended.

COVID-19 has had a negative impact on our operations and financial results to date and we expect that the COVID-19 pandemic may ultimately have a significant impact on our results of operations, financial position and cash flow for the remainder of 2020.

As a result, in March 2020, we fully drew down on our $650.0 million unsecured revolving credit facility, reduced the quarterly cash dividend on our common shares to one penny for the first and second quarters of 2020 and likely the remainder of 2020, reduced planned capital expenditures, reduced the compensation of our executive officers, board of trustees and employees, and, working closely with our hotel operating partners, significantly reduced our hotels' operating expenses.

As a result, in March 2020, we fully drew down on our $650.0 million unsecured revolving credit facility, reduced the quarterly cash dividend on our common shares to one penny, reduced planned capital expenditures, reduced the compensation of our executive officers, board of trustees and employees, and, working closely with our hotel operating partners, significantly reduced our hotels' operating expenses.

On June 29, 2020, we amended our existing credit facilities, term loan facilities and senior notes.

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Based on these amendments and the expense and cash flow reductions, we believe that we will have sufficient liquidity to meet our obligations for the next twelve months.

Our debt consisted of the following as of June 30, 2020 and December 31, 2019 (dollars in thousands):

Our debt consisted of the following as of September 30, 2020 and December 31, 2019 (dollars in thousands):

Balance Outstanding as of

Interest Rate Maturity Date June 30, 2020 December 31, 2019

Interest Rate Maturity Date September 30, 2020 December 31, 2019

Revolving credit facilities

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PHL unsecured credit facility Floating (2)

Janurary 2022 — —

January 2022 — —

Total revolving credit facilities $ 290,000 $ 165,000

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(3) Borrowings under the term loan facilities bear interest at floating rates equal to, at our option, either (i) LIBOR plus an applicable margin or (ii) a Base Rate plus an applicable margin.

As of June 30, 2020, approximately $1.6 billion of the borrowings under the term loan facilities bore an effective weighted-average fixed interest rate of 4.21%, after taking into account interest rate swap agreements, and approximately $345.0 million bore a weighted-average floating interest rate of 2.46%.

As of September 30, 2020, approximately $1.6 billion of the borrowings under the term loan facilities bore an effective weighted-average fixed interest rate of 4.21%, after taking into account interest rate swap agreements, and approximately $345.0 million bore a weighted-average floating interest rate of 2.46%.

As of December 31, 2019, approximately $1.6 billion of the borrowings under the term loan facilities bore a weighted-average fixed interest rate of 3.43%, after taking into account interest rate swap agreements, and approximately $345.0 million bore a weighted-average floating interest rate of 3.32%.

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In March 2020, as part of our plans to enhance liquidity due to the actual and anticipated impact of the COVID-19 pandemic, we fully drew down on this revolving credit facility.

As of June 30, 2020, we had $390.0 million of outstanding borrowings and borrowing capacity of $253.2 million remaining on our senior unsecured revolving credit facility.

Interest is paid on the periodic advances under the senior unsecured revolving credit facility at varying rates, based upon either LIBOR or the alternate base rate, plus an additional margin amount.

As of September 30, 2020, we had $290.0 million of outstanding borrowings and borrowing capacity of $353.2 million remaining on our senior unsecured revolving credit facility.

Interest is paid on the periodic advances under the senior unsecured revolving credit facility at varying rates, based upon either LIBOR or the alternate

base rate, plus an additional margin amount.

The interest rate depends upon our leverage ratio pursuant to the provisions of the credit facility agreement.

As a result of the amendments described in "Note 5.

Debt", the spread of the borrowings is fixed at

2.25% during the waiver period.

Debt", the spread of the borrowings is fixed at 2.25% during the waiver period.

We have the ability to increase the aggregate borrowing capacity of our senior unsecured revolving credit facility to up to $1.3 billion, subject to lender approval.

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Debt", the spread of the borrowings is fixed at 2.25% during the waiver period.

As of June 30, 2020, we had no borrowings under the PHL Credit Facility.

As of September 30, 2020, we had no borrowings under the PHL Credit Facility.

Unsecured Term Loan Facilities

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We may suspend or discontinue this program at any time.

No common shares were repurchased by the Company under the share repurchase program during the six months ended June 30, 2020.

As of June 30, 2020, $56.6 million of common shares remained available for repurchase under this program.

No common shares were repurchased by the Company under the share repurchase program during the nine months ended September 30, 2020.

As of September 30, 2020, $56.6 million of common shares remained available for repurchase under this program.

On July 27, 2017, we announced that our board of trustees authorized a new share repurchase program of up to $100.0 million of the Company's outstanding common shares.

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Cash (Used in) and Provided by Operations.

Our cash used in operating activities was $(86.6) million for the six months ended June 30, 2020.

Our cash from operations includes the operating activities of the 54 hotels we owned as of June 30, 2020, offset by corporate expenses.

Our cash provided by operating activities was $194.1 million for the six months ended June 30, 2019.

Our cash from operations includes the operating activities of the 60 hotels we owned as of June 30, 2019.

Our cash used in operating activities was $(146.9) million for the nine months ended September 30, 2020.

Our cash from operations includes the operating activities of the 53 hotels we owned as of September 30, 2020, offset by corporate expenses.

Our cash provided by operating activities was $316.1 million for the nine months ended September 30, 2019.

Our cash from operations includes the operating activities of the 57 hotels we owned as of September 30, 2019, offset by corporate expenses.

Cash Provided by Investing Activities.

Our cash provided by investing activities was $230.4 million for the six months ended June 30, 2020.

During the six months ended June 30, 2020, we invested $89.6 million in improvements to our hotel properties and received $320.0 million from sales of hotel properties.

Our cash provided by investing activities was $226.0 million for the six months ended June 30, 2019.

During the six months ended June 30, 2019, we invested $75.9 million in improvements to our hotel properties and received $302.3 million from sales of hotel properties.

Our cash provided by investing activities was $264.7 million for the nine months ended September 30, 2020.

During the nine months ended September 30, 2020, we invested $110.4 million in improvements to our hotel properties and received $375.1 million from sales of hotel properties.

Our cash provided by investing activities was $319.3 million for the nine months ended September 30, 2019.

During the nine months ended September 30, 2019, we invested $118.0 million in improvements to our hotel properties and received $437.9 million from sales of hotel properties.

Cash Provided by and Used In Financing Activities.

Our cash provided by financing activities was $152.1 million for the six months ended June 30, 2020.

During the six months ended June 30, 2020, we borrowed $760.1 million under the revolving credit facilities, repaid $535.1 million under the revolving credit facilities, borrowed and repaid $13.0 million in other debt, repurchased $1.3 million of common shares for tax withholding purposes in connection with vested share-based equity awards, paid $67.6 million in distributions, paid $3.6 million in financing fees related to the debt amendments, and paid $0.4 million in other transactions.

For the six months ended June 30, 2019, cash used in financing activities was $457.7 million.

During the six

months ended June 30, 2019, we borrowed $56.9 million under the revolving credit facilities, repaid $226.9 million under the revolving credit facilities, repaid $181.2 million of debt, repurchased $4.0 million of common shares for tax withholding purposes in connection with vested share-based equity awards, paid $101.6 million in distributions and paid $0.9 million in other transactions.

Our cash provided by financing activities was $42.3 million for the nine months ended September 30, 2020.

During the nine months ended September 30, 2020, we borrowed $760.1 million

under the revolving credit facilities, repaid $635.1 million under the revolving credit facilities, borrowed and repaid $13.0 million in other debt, repurchased $1.3 million of common shares for tax withholding purposes in connection with vested share-based equity awards, paid $77.1 million in distributions, paid $3.6 million in financing fees related to the debt amendments and paid $0.7 million in other transactions.

For the nine months ended September 30, 2019, cash used in financing activities was $686.4 million.

During the nine months ended September 30, 2019, we borrowed $211.9 million under the revolving credit facilities, repaid $281.9 million under the revolving credit facilities, repaid $451.8 million of debt, repurchased $4.0 million of common shares for tax withholding purposes in connection with vested share-based equity awards, paid $159.5 million in distributions and paid $1.1 million in other transactions.

Capital Investments

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Generally, we expect to fund renovations and improvements with available cash, restricted cash, borrowings under our credit facility, or proceeds from new mortgage debt or equity offerings.

For the six months ended June 30, 2020, we invested $89.6 million in capital investments to reposition and improve our properties, which included the completed renovations of The Westin San Diego Gaslamp Quarter and Embassy Suites San Diego Bay - Downtown.

The projects we completed in the second quarter of 2020 or shortly thereafter include:

• a $25.0 million renovation and repositioning at Donovan Hotel.

This renovation is substantially complete and the hotel will be relaunched as Hotel Zena Washington D.C., a member of our "Unofficial Z Collection" proprietary brand;

• a $10.5 million renovation of the Viceroy Santa Monica Hotel that is substantially complete.

For the nine months ended September 30, 2020, we invested $110.4 million in capital investments to reposition and improve our properties.

Since the beginning of 2020, we have completed the transformational redevelopments of several hotels and resorts that were part of the LaSalle legacy portfolio acquired in late 2018, including Chaminade Resort & Spa, San Diego Mission Bay Resort (formerly Hilton San Diego Resort & Spa), Viceroy Washington DC (formerly Mason & Rook), Hotel Zena Washington DC (formerly Donovan Hotel), Viceroy Santa Monica Hotel and Le Parc Suite Hotel.

We expect total capital investments to be approximately $15.0 million to $20.0 million for the remainder of 2020.

Contractual Obligations and Off-Balance Sheet Arrangements

The table below summarizes our contractual obligations as of June 30, 2020 and the effect such obligations are expected to have on our liquidity and cash flow in future periods (in thousands):

The table below summarizes our contractual obligations as of September 30, 2020 and the effect such obligations are expected to have on our liquidity and cash flow in future periods (in thousands):

Payments due by period

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(3) Amounts include principal and interest under the two revolving credit facilities.

Interest expense is calculated based on the weighted-average interest rate for all outstanding credit facility borrowings as of June 30, 2020.

Interest expense is calculated based on the weighted-average interest rate for all outstanding credit facility borrowings as of September 30, 2020.

It is assumed that the outstanding borrowings will be repaid upon maturity with fixed interest-only payments until then.

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Off-Balance Sheet Arrangements

As of June 30, 2020, we had no off-balance sheet arrangements.

As of September 30, 2020, we had no off-balance sheet arrangements.

We rely on the performance of the hotels to increase revenues to keep pace with inflation.

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The Company has interest rate swap agreements with an aggregate notional amount of $1.6 billion to hedge variable interest rates on our unsecured term loans.

In addition, as of June 30, 2020, the Company had interest rates swaps for an aggregate notional amount of $290.0 million which will become effective in the future as current swaps mature.

In addition, as of September 30, 2020, the Company had interest rates swaps for an aggregate notional amount of $290.0 million which will become effective in the future as current swaps mature.

We have designated these pay-fixed, receive-floating interest rate swap derivatives as cash flow hedges.

For the three and six months ended June 30, 2020, there was $(0.4) million and $(54.7) million in unrealized (loss) gain, respectively, recorded in accumulated other comprehensive income (loss).

For the three and six months ended June 30, 2019, there was $(21.1) million and $(30.1) million in unrealized (loss) gain, respectively, recorded in accumulated other comprehensive income (loss).

For the three and nine months ended September 30, 2020, there was $9.7 million and $(44.9) million in unrealized (loss) gain, respectively, recorded in accumulated other comprehensive income (loss).

For the three and nine months ended September 30, 2019, there was $(7.9) million and $(38.0) million in unrealized (loss) gain, respectively, recorded in accumulated other comprehensive income (loss).

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis