What changed in this filing

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Item 2. Management’s Discussion and Analysis

2023-07-27 compared with 2023-04-26 · 97 added, 61 removed, 193 unchanged (45% of the section changed)

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Operating performance during this recovery period has been led by strong leisure travel which has driven revenue at our resorts to pre-pandemic levels.

Corporate and group business has been slower to recover, but have increased substantially throughout 2022 and into 2023.

There has been improving demand in all of our urban markets, which were slower to recover.

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

Corporate and group business are progressing steadily with our urban hotels, leading the portfolio's growth during the second quarter with strong occupancy gains in San Francisco, Los Angeles, Washington DC, Chicago, and Portland.

We expect these trends to continue if the overall economic recovery continues and as international inbound travel continues to return.

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.

The Company continues to complete repairs and rebuilding at the LaPlaya Beach Resort & Club with the property's Bay Tower opening in the first quarter, and the Gulf Tower reopening in April but with limited resort amenities.

The Company continues to complete repairs and rebuilding at LaPlaya Beach Resort & Club.

The property's Bay Tower and Gulf Tower have reopened, and resort amenities are reopening.

Additional resort amenities will reopen through the year.

The property's Beach House remains on track to reopen in the fourth quarter of 2023, however, delays in receiving equipment, material, and inspections may further impact this timeline.

During the three months ended March 31, 2023, we had the following transactions:

The property's Beach House remains on track to substantially reopen by the end of 2023, however, delays in receiving equipment, material and inspections may adversely impact this timeline.

During the six months ended June 30, 2023, we had the following transactions:

• On February 22, 2023, we sold The Heathman Hotel in Portland, Oregon for $45.0 million.

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• On March 28, 2023, we sold Hotel Colonnade Coral Gables in Coral Gables, Florida for $63.0 million.

• We repurchased 2,923,978 common shares under our common share repurchase program at an average price of $14.04 per share.

During April 2023, we repurchased an additional 1,007,134 common shares at an average price of $13.92 per share.

• On May 9, 2023, we sold Hotel Monaco Seattle in Seattle, Washington for $63.3 million.

• On May 24, 2023, we sold Hotel Vintage Seattle in Seattle, Washington for $33.7 million.

• We repurchased 6,498,901 common shares under our common share repurchase programs at an average price of $14.01 per share.

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, 2023 and 2022:

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, 2023 and 2022:

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

2023 2022 2023 2022

Same-Property Occupancy 73.2 % 70.0 % 65.5 % 59.2 %

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Same-Property Total RevPAR $ 343.66 $ 341.45 $ 305.00 $ 278.09

The above table of hotel operating statistics includes information from all hotels owned as of March 31, 2023 for the three months ended March 31, 2023 and 2022, except for 1 Hotel San Francisco, which was closed for renovations in the first quarter of 2022 and LaPlaya Beach Resort & Club due to its closure following Hurricane Ian.

The above table of hotel operating statistics includes information from all hotels owned as of June 30, 2023, for the three months ended June 30, 2023 and 2022, except for 1 Hotel San Francisco, which was closed for renovations and LaPlaya Beach Resort & Club, due to its closure following Hurricane Ian.

The above table of hotel operating statistics includes information from all hotels owned as of June 30, 2023 for the six months ended June 30, 2023 and 2022, except for 1 Hotel San Francisco, which was closed for renovations, LaPlaya Beach Resort & Club, due to its closure following Hurricane Ian;

and includes Hotel Monaco Seattle and Hotel Vintage Seattle for the first quarter only, due to their sales in May 2023.

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, 2023 and 2022 (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, 2023 and 2022 (in thousands):

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

2023 2022 2023 2022

Net income (loss) $ 46,183 $ 28,797 $ 24,138 $ (71,419)

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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, 2023 and 2022 (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, 2023 and 2022 (in thousands):

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

2023 2022 2023 2022

Net income (loss) $ 46,183 $ 28,797 $ 24,138 $ (71,419)

Interest expense 29,544 23,161 56,974 45,733

Income tax expense (benefit) 31 — 31 —

Depreciation and amortization 57,957 60,274 116,326 119,374

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Results of Operations

At March 31, 2023 and 2022, we had 49 and 53, respectively, properties and leasehold interests.

At June 30, 2023 and 2022, we had 47 and 54, respectively, 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 or through their 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, 2023 and 2022.

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, 2023 and 2022.

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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Hotel Colonnade Coral Gables Coral Gables, FL March 28, 2023

Hotel Monaco Seattle Seattle, WA May 9, 2023

Hotel Vintage Seattle Seattle, WA May 24, 2023

Property Location Acquisition Date

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Newport Harbor Island Resort Newport, RI June 23, 2022

Comparison of the three months ended March 31, 2023 to the three months ended March 31, 2022

Revenues — Total revenues increased by $47.7 million, of which $4.8 million was due to non-comparable properties, and the balance was primarily due to an increase in leisure travel, as well as some recoveries in business and group bookings.

Hotel operating expenses — Total hotel operating expenses increased by $40.0 million due to an increase in demand and operations at our comparable properties.

Real estate taxes, personal property taxes, property insurance and ground rent — Real estate taxes, personal property taxes, property insurance and ground rent decreased by $1.6 million primarily due to a decrease in real estate taxes as a result of lower tax assessments in certain markets offset by a $1.1 million increase in ground rent at our comparable properties.

Impairment — We recognized an impairment loss of $61.0 million in 2022 related to two hotels.

Gain on sale of hotel properties — We recognized a gain on sale of $6.6 million related to the sales of The Heathman Hotel, the retail component of The Westin Michigan Avenue Chicago and Hotel Colonnade Coral Gables in 2023.

Comparison of the three months ended June 30, 2023 to the three months ended June 30, 2022

Revenues — Total revenues decreased by $13.2 million, of which $11.2 million was due to non-comparable properties.

The remaining decrease was a result of a decrease in revenue at LaPlaya Beach Resort & Club, which closed as a result of Hurricane Ian and has not fully reopened, and a decrease in revenue at Solamar Hotel due to its room renovation.

These revenue declines were substantially offset by a significant increase in revenue at 1 Hotel San Francisco which was closed most of the second quarter of 2022 for renovations.

Hotel operating expenses — Total hotel operating expenses increased by $17.6 million as a result of an increase in staffing, wage rates and benefits to accommodate rising occupancy, particularly at our urban properties.

In addition, hotel operating expenses increased at 1 Hotel San Francisco, which was closed most of the second quarter of 2022 for renovations.

Our overall increase in operating expenses were partially offset by a $7.3 million decrease due to our non-comparable properties.

Depreciation and amortization — Depreciation and amortization expense decreased by $2.3 million primarily due to the 2022 and 2023 sales of our non-comparable properties, which was partially offset by an increase due to the 2022 acquisitions of two non-comparable properties.

Real estate taxes, personal property taxes, property insurance and ground rent — Real estate taxes, personal property taxes, property insurance and ground rent decreased by $3.4 million primarily due to a decrease in real estate taxes as a result of lower tax assessments.

General and administrative — General and administrative expenses increased by $1.5 million primarily due to an increase in professional fees and employee stock compensation expense.

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

Impairment — No impairment loss was recognized in 2023.

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

Gain on sale of hotel properties — We recognized a gain on sale of $23.6 million related to the sales of Hotel Monaco Seattle and Hotel Vintage Seattle in 2023.

No gain on sale was recognized in 2022.

Business interruption insurance income — We recognized business interruption insurance income of $14.0 million in 2023 related to a partial settlement with the insurance carriers for lost income at LaPlaya Beach Resort & Club.

Interest expense — Interest expense increased by $6.4 million as a result of higher interest rates on floating rate debt.

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.

Comparison of the six months ended June 30, 2023 to the six months ended June 30, 2022

Revenues — Total revenues increased by $34.5 million primarily due to an increase in revenue at many of our urban properties as business and group bookings have steadily increased as well as an increase in revenue at 1 Hotel San Francisco which was closed most of the first and second quarters of 2022 for renovations.

These increases were partially offset by a significant decrease in revenue at LaPlaya Beach Resort & Club, which closed as a result of Hurricane Ian and has not fully reopened and a $4.9 million decrease at the non-comparable properties.

Hotel operating expenses — Total hotel operating expenses increased by $57.6 million as a result of an increase in staffing, wage rates and benefits to accommodate rising occupancy, particularly at our urban properties.

In addition, hotel operating expenses increased at 1 Hotel San Francisco, which was closed most of the first and second quarters of 2022 for renovations.

Our overall increase in operating expenses were partially offset by a $6.2 million decrease due to our non-comparable properties.

Depreciation and amortization — Depreciation and amortization expense decreased by $3.0 million primarily due to our sales of non-comparable properties in 2022 and 2023, which was partially offset by an increase due to our two non-comparable properties acquired in 2022.

Real estate taxes, personal property taxes, property insurance and ground rent — Real estate taxes, personal property taxes, property insurance and ground rent decreased by $5.0 million primarily due to a decrease in real estate taxes as a result of lower tax assessments, offset by a $1.5 million increase in ground rent at our comparable properties.

General and administrative — General and administrative expenses increased by $1.8 million primarily due to an increase in professional fees and employee stock compensation expense.

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

Impairment — No impairment loss was recognized in 2023.

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

Gain on sale of hotel properties — We recognized a gain on sale of $30.2 million related to the sales of The Heathman Hotel, the retail component of The Westin Michigan Avenue Chicago, Hotel Colonnade Coral Gables, Hotel Monaco Seattle and Hotel Vintage Seattle in 2023.

Business interruption insurance income — We recognized business interruption insurance income of $22.1 million in 2023 related to a partial settlement with the insurance carriers for lost income at LaPlaya Beach Resort & Club.

Other operating expenses — Other operating expenses increased by $3.0 million primarily due to payroll and claims administration costs at LaPlaya Beach Resort & Club for which reimbursement from insurance policies is uncertain.

Interest expense — Interest expense increased by $11.2 million as a result of higher interest rates on floating rate debt.

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

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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 property sales.

Our primary cash requirements in the short term (i.e., those requiring cash on or before March 31, 2024) 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 property operations.

We believe our cash and cash equivalents, restricted cash and the amount available on our senior unsecured revolving credit facility, which totaled $783.4 million as of March 31, 2023, along with cash generated from ongoing operations will be sufficient to satisfy our short-term cash requirements.

As of March 31, 2023, 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, 2024) 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 property operations.

We believe our cash and cash equivalents, restricted cash and the amount available on our senior unsecured revolving credit facility, which totaled $823.7 million as of June 30, 2023, along with cash generated from ongoing operations will be sufficient to satisfy our short-term cash requirements.

As of June 30, 2023, we had no off-balance sheet arrangements.

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

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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 $2.4 billion as of March 31, 2023, as summarized below:

March 31, 2023

Our total debt had an aggregate face value of $2.4 billion as of June 30, 2023, as summarized below:

June 30, 2023

(in thousands)

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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, 2023 will be $2.7 billion through their maturity, with $49.4 million of principal and $104.8 million of interest payable on or before March 31, 2024.

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, 2023 will be $2.7 billion through their maturity, with $49.5 million of principal and $271.9 million of interest payable on or before June 30, 2024.

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

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Once triggered, all of the cash flow generated by the hotel is deposited directly into lockbox accounts and then swept into cash management accounts for the benefit of our lender.

As of March 31, 2023, none of the mortgage loans was in a cash trap.

As of June 30, 2023, none of the mortgage loans were in a cash trap.

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Hotel, ground and finance lease obligations

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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, 2023, with $20.9 million payable on or before March 31, 2024.

Future fixed minimum payments associated with our hotel, ground and finance leases total $1.8 billion as of June 30, 2023, with $20.9 million payable on or before June 30, 2024.

Purchase commitments

As of March 31, 2023, we had $2.8 million of outstanding purchase commitments, all of which will be paid on or before March 31, 2024.

As of June 30, 2023, we had $8.6 million of outstanding purchase commitments, all of which will be paid on or before June 30, 2024.

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

See Capital Investments for discussion on planned capital investments.

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Preferred dividends and Series Z operating partnership units

We expect to pay aggregate annual dividends and distributions of approximately $48.6 million on our outstanding Series E, Series F, Series G and Series H Cumulative Redeemable Preferred Shares and Series Z Cumulative Perpetual Preferred Units on or before March 31, 2024 and in future years until the shares/units are redeemed.

We expect to pay aggregate annual dividends and distributions of approximately $48.6 million on our outstanding Series E, Series F, Series G and Series H Cumulative Redeemable Preferred Shares and Series Z Cumulative Perpetual Preferred Units on or before June 30, 2024 and in future years until the shares/units are redeemed.

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

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Operating Activities.

Our net cash provided by (used in) operating activities was $46.2 million for the three months ended March 31, 2023, and $38.8 million for the three months ended March 31, 2022.

Our net cash provided by (used in) operating activities was $120.2 million for the six months ended June 30, 2023, and $142.6 million for the six months ended June 30, 2022.

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 2023 as compared to 2022 is due to continued improvement in leisure travel demand, as well as continued recovery in business and group bookings.

The decrease in cash provided by (used in) operations in 2023 as compared to 2022 is primarily due to the disposition of four hotel properties and one retail component of a hotel property in 2023.

Investing Activities.

Our net cash provided by (used in) investing activities was $105.2 million for the three months ended March 31, 2023, and $(20.0) million for the three months ended March 31, 2022.

Our net cash provided by (used in) investing activities was $135.3 million for the six months ended June 30, 2023, and $(216.7) million for the six months ended June 30, 2022.

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, 2023, we invested $34.5 million in improvements to our hotel properties;

received $131.9 million from the sale of two hotel properties and one retail component of a hotel property;

• During the six months ended June 30, 2023, we invested $97.7 million in improvements to our hotel properties;

received $224.4 million from the sale of four hotel properties and one retail component of a hotel property;

and received $11.4 million in property insurance proceeds.

• During the three months ended March 31, 2022, we invested $19.9 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.

Financing Activities.

Our net cash provided by (used in) financing activities was $(57.1) million for the three months ended March 31, 2023, and $(15.2) million for the three months ended March 31, 2022.

Our net cash provided by (used in) financing activities was $(121.5) million for the six months ended June 30, 2023, and $44.6 million for the six months ended June 30, 2022.

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, 2023, we repurchased $42.7 million of common shares through our common share repurchase program and for tax withholding purposes in connection with vestings of share-based equity awards;

• During the six months ended June 30, 2023, we repurchased $92.8 million of common shares through our common share repurchase program and for tax withholding purposes in connection with vestings of share-based equity awards;

and paid $26.8 million in preferred and common distributions.

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

• 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.

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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 debt or equity offerings.

For the three months ended March 31, 2023, we invested $34.5 million in capital investments to reposition and improve our properties, including the renovations of Hilton San Diego Gaslamp Quarter, Jekyll Island Club Resort, Newport Harbor Island Resort, Viceroy Santa Monica Hotel, Skamania Lodge and Solamar Hotel, as well as capital expenditures related to the repair and remediation of LaPlaya Beach Resort & Club and Southernmost Beach Resort damaged in Hurricane Ian.

Depending on market conditions, and in some instances subject to approval from governmental authorities, we expect to invest a total of $145.0 million to $155.0 million in capital investments in 2023, which includes approximately $50.0 million in redevelopment and repositioning projects at Solamar Hotel, Hilton San Diego Gaslamp Quarter, Jekyll Island Club Resort, Estancia La Jolla Hotel & Spa and Skamania Lodge, and excludes capital expenditures related to the repair and remediation of LaPlaya Beach Resort & Club and Southernmost Beach Resort damaged in Hurricane Ian.

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For the six months ended June 30, 2023, we invested $97.7 million in capital investments to reposition and improve our properties, including the renovations of Hilton San Diego Gaslamp Quarter, Jekyll Island Club Resort, Estancia La Jolla Hotel & Spa, Newport Harbor Island Resort, Viceroy Santa Monica Hotel, Skamania Lodge and Solamar Hotel, as well as capital expenditures related to the repair and remediation of LaPlaya Beach Resort & Club and Southernmost Beach Resort, which were damaged in Hurricane Ian.

Depending on market conditions, and in some instances subject to approval from governmental authorities, we expect to invest a total of $145.0 million to $155.0 million in capital investments in 2023, which includes redevelopment and repositioning projects at Solamar Hotel, Hilton San Diego Gaslamp Quarter, Jekyll Island Club Resort, Estancia La Jolla Hotel & Spa, Newport Harbor Island Resort and Skamania Lodge, and excludes capital expenditures related to the repair and remediation of LaPlaya Beach Resort & Club and Southernmost Beach Resort which were damaged in Hurricane Ian.

Common Share Repurchase Programs, Preferred Share Repurchase Program and ATM Program

Common Share Repurchase Programs

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

On July 27, 2017, our Board of Trustees authorized a share repurchase program of up to $100.0 million of our outstanding common shares.

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

As of June 30, 2023, no common shares remained available for repurchase under this program.

On February 17, 2023, our Board of Trustees authorized a share repurchase program of up to $150.0 million of our outstanding 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.

During the three months ended March 31, 2023, the Company repurchased 2,923,978 common shares for an aggregate purchase price of $41.0 million, or an average of approximately $14.04 per share.

Upon repurchase by the Company, these common shares ceased to be outstanding and became authorized but unissued common shares.

As of March 31, 2023, $46.0 million of common shares remained available for repurchase under this program.

On February 21, 2023, 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.

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

This $150.0 million common share repurchase program will commence upon the completion of the Company's $100.0 million common share repurchase program.

Shares repurchased by the Company cease to be outstanding and become authorized but unissued common shares.

As of June 30, 2023, $146.0 million of common shares remained available for repurchase under this program.

During the six months ended June 30, 2023, we repurchased 6,498,901 common shares under the 2017 and 2023 repurchase programs, for an aggregate purchase price of $91.0 million, or an average of approximately $14.01 per share.

The timing, manner, price and amount of any repurchases under the 2023 program will be determined by us in our discretion and will depend on a variety of factors, including legal requirements, price, liquidity and economic considerations, and market conditions.

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Preferred Share Repurchase Program

On February 21, 2023, we announced that our Board of Trustees approved a repurchase program of up to $100.0 million of our outstanding preferred shares (the “Preferred Share Repurchase Program”).

On February 17, 2023, our Board of Trustees approved a repurchase program of up to $100.0 million of our outstanding preferred shares (the “Preferred Share Repurchase Program”).

Under the terms of the program, we may repurchase up to an aggregate of $100.0 million of our 6.375% Series E Cumulative Redeemable Preferred Shares, 6.30% Series F Cumulative Redeemable Preferred Shares, 6.375% Series G Cumulative Redeemable Preferred Shares and 5.70% Series H Cumulative Redeemable Preferred Shares from time to time in transactions on the open market or by private agreement.

The aggregate liquidation value of our preferred shares that may be repurchased pursuant to the Preferred Shares Repurchase Program is $715.0 million.

During the six months ended June 30, 2023, no Preferred Shares were repurchased under this program.

The timing, manner, price and amount of any repurchases will be determined by us in our discretion and will depend on a variety of factors, including legal requirements, price, liquidity and economic considerations, and market conditions.

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The program does not have an expiration date and may be suspended, modified or discontinued at any time.

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, 2023.

As of February 21, 2023, the ATM program expired.

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

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

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As of March 31, 2023, we have interest rate swap agreements with an aggregate notional amount of $840.0 million to hedge variable interest rates on our unsecured term loans.

As of June 30, 2023, 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