What changed in this filing

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Item 2. Management’s Discussion and Analysis

2022-07-26 compared with 2022-04-26 · 109 added, 73 removed, 175 unchanged (51% of the section changed)

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These factors include, but are not limited to, the following:

• the COVID-19 pandemic has had, and is expected to continue to have, a significant impact on our financial condition and operations, which impacts our ability to obtain acceptable financing to fund resulting reductions in cash from operations.

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;

• the COVID-19 pandemic has had, and is expected to continue to have, a significant negative impact on our financial condition and operations, which impacts our ability to obtain acceptable financing to fund resulting reductions in cash from operations.

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 negatively affect our results, operations, outlooks, plans, goals, growth, reputation, cash flows, liquidity and share price;

• as a result of the COVID-19 pandemic, we suspended operations at most of our hotels and resorts.

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Except as otherwise required by the federal securities laws, we disclaim any obligations or undertaking to publicly release any updates or revisions to any forward-looking statement contained herein (or elsewhere) to reflect any change in our expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.

COVID-19 and Liquidity Update

In March 2020, the World Health Organization declared the novel coronavirus ("COVID-19") to be a global pandemic and the virus spread throughout the United States and the world.

As a result of this pandemic and subsequent government mandates, health official recommendations, corporate policy changes and individual responses, hotel demand dramatically declined.

In response, we implemented significant cost controls, salary reductions and temporarily suspended operations at 47 of our hotels and resorts in 2020.

In addition, to improve liquidity, we raised capital by issuing convertible notes and additional preferred shares.

We also amended the agreements governing our existing credit facilities, term loan facilities and unsecured senior notes which, among other things, waived quarterly financial covenants until the second quarter of 2022, with substantially less restrictive covenants through the end of the first quarter of 2023.

As demand has since improved as a result of an increase in vaccinations and corresponding lifting of governmental restrictions and recommendations, we gradually reopened our hotels and resorts.

As of July 1, 2021, all of our hotels and resorts were open, with the exception of Hotel Vitale, whose operations will remain suspended until the completion of its renovations and repositioning, which we expect to occur in the second quarter of 2022.

The COVID-19 pandemic has had a significant negative impact on our operations and financial results and is expected to continue to have a negative impact on our results of operations, financial position and cash flows for the remainder of 2022.

However, results have improved in the first quarter of 2022 relative to 2021 and this trend is expected to continue throughout 2022.

The demand recovery has been led by strong leisure travel with a slower recovery in business and group travel.

As a result of the strength in leisure travel, our resort properties are operating at or above pre-pandemic levels.

Based on the amendments to our credit agreements, assumptions regarding the recovery of demand and the Company's liquidity of $694.4 million as of March 31, 2022, we believe we have sufficient liquidity to meet our obligations for the next 12 months.

For further discussion on our liquidity, see Liquidity and Capital Resources .

The COVID-19 pandemic, which began in early 2020, has had a significant negative impact on our operations and financial results and is expected to continue to have a negative impact on the hotel industry and our results of operations, financial position and cash flows for the remainder of 2022.

Results improved in 2021 and have continued to improve through the first six months of 2022.

We exited the debt covenant waiver period under our credit facilities as of the end of the second quarter of 2022, and we are in compliance with the covenants in the credit facility agreements.

There remains significant uncertainty regarding the trends and outlook as a result of new variants and individual and government responses.

Overall performance has been led by the recovery of leisure travel which has driven revenue at our resorts to pre-pandemic levels.

Corporate and group business has been slower to recover, but has substantially increased compared to 2021.

We expect these trends to continue if the overall economic recovery continues.

Recent inflation and the expectation of future inflation have caused labor and other costs to increase and have added additional uncertainty in consumer confidence and the continued growth in the economy.

During the six months ended June 30, 2022, we had the following transactions:

• On May 11, 2022, we acquired Inn on Fifth in Naples, Florida for $156.0 million.

• On June 23, 2022, we acquired Gurney's Newport Resort & Marina in Newport, Rhode Island for $174.0 million.

• On June 28, 2022, we sold The Marker San Francisco in San Francisco, California for $77.0 million.

While we do not operate our hotel properties, both our asset management team and our executive management team monitor and work cooperatively with our hotel managers by advising and making recommendations in all aspects of our hotels’ operations, including property positioning and repositioning, revenue and expense management, operations analysis, physical design, renovation and capital improvements, guest experience and overall strategic direction.

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Hotel Operating Statistics

The following table represents the key same-property hotel operating statistics for our hotels for the three months ended March 31, 2022 and 2021:

For the three months ended March 31,

The following table represents the key same-property hotel operating statistics for our hotels for the three and six months ended June 30, 2022 and 2021:

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

2022 2021 2022 2021

Same-Property Occupancy 69.4 % 42.6 % 58.9 % 32.4 %

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Same-Property Total RevPAR $ 335.61 $ 170.83 $ 277.80 $ 130.01

The above table of hotel operating statistics includes information from all hotels owned as of March 31, 2022 for the first quarters of 2022 and 2021, except for Hotel Vitale, which was closed for renovations in the first quarter of 2022.

The above table of hotel operating statistics includes information from all hotels owned as of June 30, 2022 for the three months ended June 30, 2022 and 2021, except for 1 Hotel San Francisco which was closed for renovations, and Gurney's Newport Resort & Marina due to its acquisition on June 23, 2022.

The above table of hotel operating statistics includes information from all hotels owned as of June 30, 2022 for the six months ended June 30, 2022 and 2021, except for 1 Hotel San Francisco for the first and second quarter which was closed for renovations, Inn on Fifth for the first quarter due to its acquisition on May 11, 2022, and Gurney's Newport Resort & Marina for the first and second quarter due to its acquisition on June 23, 2022.

Additionally, The Marker San Francisco was excluded in the second quarter due to its sale on June 28, 2022.

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 months ended March 31, 2022 and 2021 (in thousands):

For the three months ended March 31,

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, 2022 and 2021 (in thousands):

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

2022 2021 2022 2021

Net income (loss) $ 28,797 $ 1,428 $ (71,419) $ (120,012)

Real estate depreciation and amortization 60,185 54,589 119,195 109,922

(Gain) loss on sale of hotel properties — (64,558) — (64,558)

Impairment loss 12,271 — 73,254 14,856

FFO $ 101,253 $ (8,541) $ 121,030 $ (59,792)

Distribution to preferred shareholders (11,344) (8,139)

Distribution to preferred shareholders and unit holders (11,991) (10,094) (23,335) (18,233)

FFO available to common share and unit holders $ 89,262 $ (18,635) $ 97,695 $ (78,025)

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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 months ended March 31, 2022 and 2021 (in thousands):

For the three months ended March 31,

The following table reconciles net income (loss) to EBITDA and EBITDA re for the three and six months ended June 30, 2022 and 2021 (in thousands):

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

2022 2021 2022 2021

Net income (loss) $ 28,797 $ 1,428 $ (71,419) $ (120,012)

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EBITDA $ 112,232 $ 80,985 $ 93,688 $ 40,322

(Gain) loss on sale of hotel properties — (64,558) — (64,558)

Impairment loss 12,271 — 73,254 14,856

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Results of Operations

At March 31, 2022 and 2021, we had 53 wholly owned properties and leasehold interests.

At June 30, 2022 and 2021, we had 54 and 51, 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 March 31, 2022 and 2021.

Based on when a property was acquired or disposed, operating results for certain properties are not comparable for the three and six months ended June 30, 2022 and 2021.

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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Villa Florence San Francisco on Union Square San Francisco, CA September 9, 2021

The Marker San Francisco San Francisco, CA June 28, 2022

Property Location Acquisition Date

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Estancia La Jolla Hotel & Spa La Jolla, CA December 1, 2021

Comparison of the three months ended March 31, 2022 to the three months ended March 31, 2021

Revenues — Total hotel revenues increased by $174.4 million, of which $38.4 million was due to non-comparable properties, and the remaining increase was primarily due to an increase in leisure travel demand during the spring break travel season, as well as some recoveries in business and group bookings.

This increase in demand was the result of an increase in COVID-19 vaccination rates and an easing of governmental restrictions relative to the prior year.

Also, 13 of our hotels' operations remained temporarily suspended throughout the first quarter of 2021.

Hotel operating expenses — Total hotel operating expenses increased by $101.7 million, of which $21.0 million was due to non-comparable properties, and the remaining increase was primarily due to resuming operations at our comparable properties and returning demand in the first quarter of 2022.

Depreciation and amortization — Depreciation and amortization expense increased by $3.7 million primarily due to our three non-comparable properties acquired in 2021.

Inn on Fifth Naples, FL May 11, 2022

Gurney's Newport Resort & Marina Newport, RI June 23, 2022

Comparison of the three months ended June 30, 2022 to the three months ended June 30, 2021

Revenues — Total hotel revenues increased by $234.2 million, of which $50.7 million was due to non-comparable properties, and the balance was primarily due to an increase in leisure travel demand during the spring and summer travel season, as well as some recoveries in business and group bookings.

Hotel operating expenses — Total hotel operating expenses increased by $121.2 million, of which $29.2 million was due to non-comparable properties, and the balance was primarily due to resuming operations at our comparable properties and returning demand in the second quarter of 2022.

Depreciation and amortization — Depreciation and amortization expense increased by $5.6 million primarily due to our acquisitions of three non-comparable properties in 2021.

Real estate taxes, personal property taxes, property insurance and ground rent — Real estate taxes, personal property taxes, property insurance and ground rent increased by $3.6 million primarily due to an increase in ground rent at our three non-comparable properties acquired in 2021.

General and administrative — General and administrative expenses increased by $2.1 million primarily due to an increase of $1.6 million in compensation expense.

Impairment loss — We recognized an impairment loss of $12.3 million in 2022 related to two hotels.

No impairment loss was incurred during in 2021.

Gain on sale of hotel properties — No gain on sale was recognized in 2022.

We recognized a gain on sale of $64.6 million in 2021 primarily due to the sale of Sir Francis Drake.

Other operating expenses — Other operating expenses increased by $1.4 million primarily due to an increase in pre-opening expenses.

Interest expense — Interest expense decreased by $1.6 million primarily due to interest capitalized on renovation projects in 2022 as well as the maturity of certain interest rate swap agreements.

Non-controlling interests — Non-controlling interests represents the allocation of income or loss of the Operating Partnership to third-party common OP unit holders and to the preferred OP unit holders.

In 2022, this amount includes $0.6 million in preferred distributions to the holders of Series Z Preferred Units which were issued in May 2022.

Distributions to preferred shareholders — Distributions to preferred shareholders increased as a result of our issuance of the Series G and Series H Cumulative Redeemable Preferred Shares in May 2021 and July 2021, respectively.

Comparison of the six months ended June 30, 2022 to the six months ended June 30, 2021

Revenues — Total hotel revenues increased by $408.6 million, of which $90.0 million was due to non-comparable properties, and the balance was primarily due to an increase in leisure travel demand during the spring and summer travel seasons, as well as some recoveries in business and group bookings.

In addition, 13 of our hotels remained temporarily suspended throughout the first quarter of 2021.

Hotel operating expenses — Total hotel operating expenses increased by $222.8 million, of which $51.1 million was due to non-comparable properties, and the balance was primarily due to resuming operations at our comparable properties and returning demand in 2022.

Depreciation and amortization — Depreciation and amortization expense increased by $9.2 million primarily due to our acquisitions of three non-comparable properties in 2021.

Real estate taxes, personal property taxes, property insurance and ground rent — Real estate taxes, personal property taxes, property insurance and ground rent increased by $5.5 million primarily due to an increase in ground rent and property insurance at our three non-comparable properties acquired in 2021.

General and administrative — General and administrative expenses increased by $2.0 million primarily due to a $1.6 million increase in compensation expense.

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

Impairment loss — For the three months ended March 31, 2022, we recognized an impairment loss of $61.0 million related to two hotels.

For the three months ended March 31, 2021, we recognized an impairment loss of $14.9 million related to one hotel.

Interest expense — Interest expense decreased by $2.8 million primarily due to slightly lower interest rates in 2022.

Distributions to preferred shareholders — Distributions to preferred shareholders primarily increased as a result of the issuance of the Series G and Series H Cumulative Redeemable Preferred Shares in May 2021 and July 2021, respectively.

Impairment loss — We recognized an impairment loss of $73.3 million in 2022 related to two hotels.

We recognized an impairment loss of $14.9 million in 2021 related to one hotel.

Gain on sale of hotel properties — No gain on sale was recognized in 2022.

We recognized a gain on sale of $64.6 million in 2021 primarily due to the sale of Sir Francis Drake.

Other operating expenses — Other operating expenses increased by $2.0 million primarily due to an increase in pre-opening expenses and hotel management transition costs.

Interest expense — Interest expense decreased by $4.4 million primarily due to interest capitalized on renovation projects in 2022 as well as the maturity of certain interest rate swap agreements.

In 2022, this amount includes $0.6 million in preferred distributions to the holders of Series Z Preferred Units which were issued in May 2022.

Critical Accounting Policies

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Summary of Significant Accounting Policies to our consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for recently issued accounting pronouncements that may affect us.

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Liquidity and Capital Resources

Our primary sources of liquidity are cash provided by our operations, borrowings under our credit facilities, net proceeds from equity and debt offerings, and net proceeds from hotel property sales.

Our primary cash requirements in the short term (i.e., those requiring cash on or before March 31, 2023) will be to fund property lease obligations, interest and current principal on debt, capital improvements, dividends on common and preferred shares, and working capital of our hotel property operations.

We believe our cash and cash equivalents, restricted cash and the amount available on our senior unsecured revolving credit facility, which totaled $694.4 million as of March 31, 2022, along with cash generated from ongoing operations will be sufficient to satisfy our short-term cash requirements.

As of March 31, 2022, we had no off-balance sheet arrangements.

Our primary cash requirements in the short term (i.e., those requiring cash on or before June 30, 2023) will be to fund property lease obligations, interest and current principal on debt, capital improvements, dividends on common and preferred shares, and working capital of our hotel property operations.

We believe our cash and cash equivalents, restricted cash and the amount available on our senior unsecured revolving credit facility, which totaled $561.2 million as of June 30, 2022, along with cash generated from ongoing operations will be sufficient to satisfy our short-term cash requirements.

As of June 30, 2022, we had no off-balance sheet arrangements.

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In order to maintain our qualification as a REIT, we must pay dividends to our shareholders of at least 90% of our taxable income.

As a result of this requirement, we cannot rely on retained earnings to fund long-term liquidity requirements such as hotel property acquisitions, redevelopements and repayments of long-term debt.

As a result of this requirement, we cannot rely on retained earnings to fund long-term liquidity requirements such as hotel property acquisitions, redevelopments and repayments of long-term debt.

As such, we expect to continue to raise capital through equity and debt offerings to fund our growth.

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Our outstanding debt consisted of floating- and fixed-rate unsecured term loans, convertible senior notes, senior unsecured notes and mortgage loans with varying maturities.

Our total debt had an aggregate face value of $2.5 billion as of March 31, 2022, as summarized in the following table.

March 31, 2022

Our total debt had an aggregate face value of $2.5 billion as of June 30, 2022, as summarized in the following table:

June 30, 2022

(in thousands)

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Debt to our consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

We have the option to extend certain of our current debt maturities with the payment of extension fees.

Assuming we exercise all extension options available in our debt agreements, we expect that future principal and interest payments associated with our debt obligations outstanding as of March 31, 2022 will be $2.6 billion through their maturity, with $162.3 million payable on or before March 31, 2023.

In April 2022, we repaid the remaining $26.3 million principal balance on our Second Term Loan using cash on hand.

We intend to pay amounts due with available cash, borrowings under our revolving credit facility, or refinance with long term debt.

We have the option to extend certain of our current debt maturities with the payment of extension fees.

Assuming we exercise all extension options available in our debt agreements, we expect that future principal and interest payments associated with our debt obligations outstanding as of June 30, 2022 will be $2.7 billion through their maturity, with $60.0 million of principal and $83.7 million of interest payable on or before June 30, 2023.

We intend to pay amounts due with available cash, borrowings under our revolving credit facility, proceeds from property sales or refinance with long-term debt.

In February 2021 and December 2021, we amended the agreements governing our existing credit facilities, term loan facilities and senior notes to, among other things, waive financial covenants until the second quarter of 2022 (with substantially less-restrictive covenants through the end of the first quarter of 2023), extend certain debt maturity dates and increase the interest rate spread.

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Margaritaville Hollywood Beach Resort also triggered cash trap provisions prior to our acquisition, but was released from this provision during the first quarter of 2022.

Table of Content

Hotel, ground and finance lease obligations

Our properties that are subject to hotel, ground or finance leases, as noted in Note 11 , Commitment and Contingencies , to our consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q, may require minimum fixed rent payments, percentage rent payments based on a percentage of revenues in excess of certain thresholds or rent payments equal to the greater of a minimum fixed rent or percentage rent.

Our properties that are subject to hotel, ground or finance leases, as noted in Note 11.

Commitment and Contingencies to our consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q, may require minimum fixed rent payments, percentage rent payments based on a percentage of revenues in excess of certain thresholds or rent payments equal to the greater of a minimum fixed rent or percentage rent.

Minimum fixed rent may be adjusted annually by increases in consumer price index ("CPI") and may be subject to minimum and maximum increases.

Future fixed minimum payments associated with our hotel, ground and finance leases total $1.8 billion as of March 31, 2022, with $20.5 million payable within the next 12 months.

Future fixed minimum payments associated with our hotel, ground and finance leases total $1.8 billion as of June 30, 2022, with $20.8 million payable on or before June 30, 2023.

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Purchase commitments

As of March 31, 2022, we had $5.3 million of outstanding purchase commitments, all of which will be paid within the next 12 months.

As of June 30, 2022, we had $6.8 million of outstanding purchase commitments, all of which will be paid on or before June 30, 2023.

These purchase commitments represent outstanding purchase orders and contracts that have been executed for capital and renovation projects at our properties.

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Preferred dividends

We expect to pay aggregate annual dividends of approximately $45.4 million on our outstanding Series E, Series F, Series G and Series H Cumulative Redeemable Preferred Shares within the next 12 months and in each future year until the shares are redeemed.

For further discussion on our preferred shares, see Note 7.

We expect to pay aggregate annual dividends of approximately $50.0 million on our outstanding Series E, Series F, Series G and Series H Cumulative Redeemable Preferred Shares and our Series Z Cumulative Perpetual Preferred Units within the next 12 months and in each future year until the shares are redeemed.

For further discussion on our preferred shares and units, see Note 7.

Equity to our consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

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Operating Activities.

Our net cash provided by (used in) operating activities was $38.8 million for the three months ended March 31, 2022 and $(7.1) million for the three months ended March 31, 2021.

Our net cash provided by (used in) operating activities was $142.6 million for the six months ended June 30, 2022, and $(2.3) million for the six months ended June 30, 2021.

Fluctuations in our net cash provided by (used in) operating activities are primarily the result of changes in hotel revenues, operating cash requirements and corporate expenses.

The increase in cash provided by (used in) operations in 2022 as compared to 2021 is due to the resumption of operations at our hotels, as 13 of our hotels' operations remained temporarily suspended throughout the first quarter of 2021.

The increase in cash provided by (used in) operations in 2022 as compared to 2021 is due to the resumption of operations at our hotels, an i ncrease in leisure travel demand during the spring and summer travel seasons, as well as some recoveries in business and group bookings.

In addition, the operations at 13 of our hotels were temporarily suspended throughout the first quarter of 2021 and all hotels are operating in 2022.

Investing Activities.

Our net cash provided by (used in) investing activities was $(20.0) million for the three months ended March 31, 2022 and $(9.7) million for the three months ended March 31, 2021.

Our net cash provided by (used in) investing activities was $(216.7) million for the six months ended June 30, 2022, and $127.8 million for the six months ended June 30, 2021.

Fluctuations in our net cash provided by (used in) investing activities are primarily the result of acquisition and disposition activities, as well as capital improvements and additions to our properties.

• During the three months ended March 31, 2022, we invested $19.9 million in improvements to our hotel properties.

• During the three months ended March 31, 2021, we invested $9.6 million in improvements to our hotel properties.

• During the six months ended June 30, 2022, we invested $42.4 million in improvements to our hotel properties;

received $73.0 million from the sale of one hotel property;

and purchased two hotel properties using cash of $247.2 million.

• During the six months ended June 30, 2021, we invested $27.0 million in improvements to our hotel properties;

received $172.0 million from the sale of two hotel properties;

and paid a deposit for the acquisition of one hotel property using cash of $17.1 million.

Financing Activities.

Our net cash provided by (used in) financing activities was $(15.2) million for the three months ended March 31, 2022 and $5.1 million for the three months ended March 31, 2021.

Our net cash provided by (used in) financing activities was $44.6 million for the six months ended June 30, 2022, and $61.2 million for the six months ended June 30, 2021.

Fluctuations in our net cash provided by (used in) financing activities are primarily the result of our issuance and repurchase of debt and equity securities and distributions paid on our preferred and common shares.

• During the three months ended March 31, 2022, we paid $12.7 million in preferred and common distributions.

• During the three months ended March 31, 2021, we borrowed $263.8 million in other debt;

repaid $40.0 million of revolving credit facilities borrowings and $177.0 million in other debt;

• During the six months ended June 30, 2022, we borrowed and repaid $180.0 million and $80.0 million, respectively, of revolving credit facility borrowings;

repaid $27.1 million in other debt;

and paid $25.3 million in preferred and common distributions.

• During the six months ended June 30, 2021, we borrowed and repaid $268.6 million and $338.0 million, respectively, in other debt;

received $230.0 million in gross proceeds from the issuances of preferred shares;

repaid $40.0 million of revolving credit facilities borrowings;

paid $18.9 million in preferred and common distributions;

purchased $21.0 million in capped call transactions;

paid $7.7 million in offering costs;

and paid $9.6 million in financing fees.

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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 debt or equity offerings.

For the three months ended March 31, 2022, we invested $19.9 million in capital investments to reposition and improve our properties, including the renovations of Hotel Vitale and Hotel Ziggy (formerly Grafton on Sunset).

Depending on market conditions, we expect to invest a total of $100.0 million to $120.0 million in capital investments in 2022, which includes approximately $50.0 million in redevelopment and repositioning projects at Hotel Vitale, Skamania Lodge, Solamar Hotel, Hilton San Diego Gaslamp Quarter and Jekyll Island Club Resort.

For the six months ended June 30, 2022, we invested $42.4 million in capital investments to reposition and improve our properties, including the renovations of 1 Hotel San Francisco (formerly Hotel Vitale), Hotel Ziggy (formerly Grafton on Sunset) and Skamania Lodge.

Depending on market conditions, we expect to invest a total of $100.0 million to $120.0 million in capital investments in 2022, which includes approximately $50.0 million in redevelopment and repositioning projects at 1 Hotel San Francisco (formerly Hotel Vitale), Skamania Lodge, Solamar Hotel, Hilton San Diego Gaslamp Quarter and Jekyll Island Club Resort.

Common Share Repurchase Program and ATM Program

On February 22, 2016, we announced that our Board of Trustees authorized a share repurchase program of up to $150.0 million of the Company's outstanding common shares.

On February 22, 2016, we announced that our Board of Trustees authorized a share repurchase program of up to $150.0 million of common shares.

Under this program, we may repurchase common shares from time to time in transactions on the open market or by private agreement.

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 three months ended March 31, 2022.

As of March 31, 2022, $56.6 million of common shares remained available for repurchase under this program.

The credit agreements governing our existing indebtedness prohibit us from repurchasing common shares until we have certified compliance with certain financial covenants through June 30, 2022.

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.

No common shares were repurchased by the Company under the share repurchase program during the six months ended June 30, 2022.

As of June 30, 2022, $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 common shares.

Under this program, we may repurchase common shares from time to time in transactions on the open market or by private agreement.

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On April 29, 2021, we filed a prospectus supplement with the SEC to sell up to $200.0 million of common shares under an "at the market" offering program (the "ATM program").

No common shares were issued or sold under the ATM program during the three months ended March 31, 2022.

As of March 31, 2022, $200.0 million of common shares remained available for issuance under the ATM program.

No common shares were issued or sold under the ATM program during the six months ended June 30, 2022.

As of June 30, 2022, $200.0 million of common shares remained available for issuance under the ATM program.

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

Generally, our hotel operators possess the ability to adjust room rates daily, except for group or corporate rates contractually committed to in advance, although competitive pressures may limit the ability of our operators to raise rates faster than inflation or even at the same rate.

Inflation may also affect our expenses and costs of capital investments by increasing, among other things, the costs of labor, employee related benefits, food, commodities, and other materials, taxes, insurance and utilities.

Demand in the lodging industry is affected by recurring seasonal patterns which are greatly influenced by overall economic cycles, geographic locations, weather and customer mix at the hotels.

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Derivative instruments are subject to fair value reporting at each reporting date and the increase or decrease in fair value is recorded in net income (loss) or accumulated other comprehensive income (loss), based on the applicable hedge accounting guidance.

Derivatives expose the Company to credit risk in the event of non-performance by the counter parties under the terms of the interest rate hedge agreements.

Derivatives expose the Company to credit risk in the event of non-performance by the counterparties under the terms of the interest rate hedge agreements.

We believe we minimize the credit risk by transacting with major credit-worthy financial institutions.

As of March 31, 2022, we have interest rate swap agreements with an aggregate notional amount of $1.1 billion to hedge variable interest rates on our unsecured term loans.

As of June 30, 2022, we have interest rate swap agreements with an aggregate notional amount of $1.0 billion to hedge variable interest rates on our unsecured term loans.

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

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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