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Item 2. Management’s Discussion and Analysis

2024-10-30 compared with 2024-08-01 · 75 added, 64 removed, 294 unchanged (32% of the section changed)

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We have a diverse portfolio of iconic and market-leading hotels and resorts with significant underlying real estate value.

We currently have interests in 42 hotels, consisting of premium-branded hotels and resorts with approximately 26,000 rooms, of which over 86% are luxury and upper upscale (as defined by Smith Travel Research) and are located in prime U.S.

We currently have interests in 41 hotels, consisting of premium-branded hotels and resorts with over 25,000 rooms, of which over 86% are luxury and upper upscale (as defined by Smith Travel Research) and are located in prime U.S.

markets and its territories.

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in our unaudited condensed consolidated financial statements included elsewhere within this Quarterly Report on Form 10-Q for additional information regarding our operating segments.

Economic disruptions, including as a result of elevated interest rates and elevated rates of inflation may adversely affect our business.

Inflationary concerns can affect both consumer sentiment and demand for travel, as well as increase labor or other costs to maintain or operate hotels that cannot be reduced without adversely affecting business growth or hotel value.

However, we have relied on the performance of our hotels and active asset management to mitigate the effects of inflation, which is expected to continue to stabilize, and current macroeconomic uncertain ty.

During the second quarter of 2024, we continued to experience improvements in overall demand across our portfolio, although average daily rate ("ADR") growth has slowed as the industry recovery has stabilized and seasonal patterns have normalized.

Economic disruptions, including as a result of elevated interest rates and elevated rates of inflation, may adversely affect our business by affecting consumer sentiment and demand for travel.

However, inflationary concerns have moderated and expectations of further interest rate reductions continue.

In addition, we are experiencing near-term disruption related to negotiations between our third-party operators and unions at certain hotels, which includes strikes and other labor activity and may include increases in labor or other costs to maintain or operate hotels during a labor disruption.

We have relied on the performance of our hotels and active asset management to mitigate the effects of current macroeconomic uncertain ty and disruption from union activity.

During the third quarter of 2024, we continued to experience improvements in overall demand across our portfolio, although average daily rate ("ADR") growth has slowed as the industry recovery has stabilized and seasonal patterns have normalized.

While there can be no assurances that we will not experience further fluctuations in hotel revenues or earnings at our hotels due to inflation and other macroeconomic factors, local economic factors and demand, a potential economic slowdown or a recession and geopolitical conflicts , we expect the positive momentum to continue for the remainder of 2024 based on current demand trends, expected increases in city-wide events and as demand from international travel continues to improve.

Recent Events

In May 2024, Park Intermediate Holdings LLC (our "Operating Company"), PK Domestic Property LLC, an indirect subsidiary of the Company ("PK Domestic") and PK Finance Co-Issuer Inc.

("PK Finance") issued $550 million of 7.000% senior notes due in 2030 ("2030 Senior Notes") as well as amended our existing credit agreement to include a new $200 million term loan due May 2027 ("2024 Term Loan").

Net proceeds from the 2030 Senior Notes and the 2024 Term Loan were used to repurchase or redeem all of the $650 million of 7.500% senior notes due in 2025 ("2025 Senior Notes"), and the remainder was used for general corporate purposes.

Refer to Note 6:

"Debt" in our unaudited condensed consolidated financial statements included elsewhere within this Quarterly Report on Form 10-Q for additional information.

During the three months ended June 30, 2024, we repurchased approximately 1.7 million shares of our common stock for a total purchase price of $25 million.

Additionally in July 2024, the joint ventures that own and operate the Hilton La Jolla Torrey Pines sold the hotel for gross proceeds of approximately $165 million, and our pro-rata share of the gross proceeds was approximately $41 million, which was reduced by our portion of debt of approximately $17 million.

In July 2024, the unconsolidated joint venture that owns and operates the Hilton La Jolla Torrey Pines sold the hotel for gross proceeds of approximately $165 million, and our pro-rata share of the gross proceeds was approximately $41 million, which was reduced by our portion of debt of approximately $17 million.

We recognized a gain of approximately $19 million, which is included in equity in earnings from investments in affiliates in our condensed consolidated statements of operations.

Additionally, in August 2024, we permanently closed the Hilton Oakland Airport and subsequently terminated its ground lease, returning the property to the ground lessor.

During the three months ended September 30, 2024, we repurchased approximately 2.5 million shares of our common stock for a total purchase price of $35 million.

Key Business Metrics Used by Management

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We present comparable hotel results to help us and our investors evaluate the ongoing performance of our comparable hotels.

Our comparable hotels data includes results from hotels that were active and operating in our portfolio since January 1st of the previous year and excludes results from property dispositions that have occurred through June 30, 2024 and the Hilton San Francisco Hotels, which were placed into receivership at the end of October 2023.

Our comparable hotels data includes results from hotels that were active and operating in our portfolio since January 1st of the previous year and excludes results from property dispositions that have occurred through September 30, 2024 and the Hilton San Francisco Hotels, which were placed into receivership at the end of October 2023.

Non-GAAP Financial Measures

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The following table provides a reconciliation of Net income (loss) to Hotel Adjusted EBITDA:

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

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Interest expense associated with hotels in receivership (1)

Income tax (benefit) expense (12) 3 (11) 5

Income tax expense (benefit) 2 — (9) 5

Interest expense, income tax and depreciation and amortization included in equity in earnings from investments in affiliates 4 2 9 7

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Gain on sales of assets, net (2)

(19) — (19) (15)

Gain on derecognition of assets (1)

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_____________________________________

(1) For the three and six months ended June 30, 2024, represents accrued interest expense associated with the default of the SF Mortgage Loan, which was offset by a gain on derecognition for the corresponding increase of the contract asset on our condensed consolidated balance sheets, as we expect to be released from this obligation upon final resolution with the lender.

(1) For the three and nine months ended September 30, 2024 and 2023, represents accrued interest expense associated with the default of the SF Mortgage Loan, which is offset by a gain on derecognition for the corresponding increase of the contract asset on our condensed consolidated balance sheets beginning October 2023, as we expect to be released from this obligation upon final resolution with the lender.

(2) For the three and nine months ended September 30, 2024, includes a gain of $19 million on the sale of the Hilton La Jolla Torrey Pines included in equity in earnings from investments in affiliates .

(3) Included in other (loss) gain, net.

(3) Includes other revenues and other expenses , non-income taxes on TRS leases included in other property expenses and corporate general and administrative expenses.

(4) Includes other revenues and other expenses , non-income taxes on leases with our taxable REIT subsidiaries ("TRSs") included in other property expenses and corporate general and administrative expenses.

Nareit FFO attributable to stockholders and Adjusted FFO attributable to stockholders

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The following table provides a reconciliation of Net income (loss) attributable to stockholders to Nareit FFO attributable to stockholders and Adjusted FFO attributable to stockholders:

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

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_____________________________________

(1) For the three and nine months ended September 30, 2024, represents accrued interest expense associated with the default of the SF Mortgage Loan, which is offset by a gain on derecognition for the corresponding increase of the contract asset on our condensed consolidated balance sheets beginning October 2023, as we expect to be released from this obligation upon final resolution with the lender.

For the three and nine months ended September 30, 2023, reflects incremental default interest expense and late payment administrative fees associated with the default of the SF Mortgage Loan beginning in June 2023.

(2) Included in other (loss) gain, net.

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Results of Operations

Our non-comparable hotels consists of one hotel sold and one hotel returned to the lessor upon early termination of the ground lease during 2023.

Our non-comparable hotels consist of one hotel sold and two hotels returned to the lessor upon termination of the ground leases since January 1, 2023.

The results of operations of these hotels are included in our consolidated results only during our period of ownership.

Additionally, our non-comparable hotels also consist of the two Hilton San Francisco Hotels, which are excluded from our consolidated results for the three and six months ended June 30, 2024, as a result of the hotels being placed into receivership in October 2023, which had a significant effect on the year-over-year comparability of our operations as further illustrated in the table of Hotel Revenues and Operating Expenses below.

Additionally, our non-comparable hotels also consist of the two Hilton San Francisco Hotels, which are excluded from our consolidated results for the three and nine months ended September 30, 2024, as a result of the hotels being placed into receivership in October 2023, which had a significant effect on the year-over-year comparability of our operations as further illustrated in the table of Hotel Revenues and Operating Expenses below.

Hotel Revenues and Operating Expenses

Three Months Ended June 30, Change from Non-Comparable Hotels

Three Months Ended September 30, Change from Non-Comparable Hotels

2024 2023 Change Change from Comparable Hotels (1)

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(1) Change from our comparable hotels primarily relates to the market-specific conditions discussed below.

Six Months Ended June 30, Change from Non-Comparable Hotels

Nine Months Ended September 30, Change from Non-Comparable Hotels

2024 2023 Change Change from Comparable Hotels (1)

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(1) Change from our comparable hotels primarily relates to the market-specific conditions discussed below.

Group, transient, contract and other rooms revenue for the three and six months ended June 30, 2024, as well as the change for each segment compared to the same period in 2023 are as follows:

Three Months Ended June 30, Change from

Group, transient, contract and other rooms revenue for the three and nine months ended September 30, 2024, as well as the change for each segment compared to the same periods in 2023 are as follows:

Three Months Ended September 30, Change from

Non-Comparable Hotels

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(1) Change from our comparable hotels primarily relates to the market-specific conditions discussed below.

Six Months Ended June 30, Change from

Nine Months Ended September 30, Change from

Non-Comparable Hotels

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Market-Specific Conditions

The increases in hotel revenues and operating expenses for our comparable hotels during the three and six months ended June 30, 2024, as compared to the same periods in 2023, were primarily attributable to our hotels in the Key West, Orlando, New York and Boston markets.

Combined occupancy and ADR at our Key West hotels increased 34.2 percentage points and 7.5%, respectively, for the three months ended June 30, 2024 and 19.7 percentage points and 11.1%, respectively, for the six months ended June 30, 2024 compared to the same periods in 2023 due to increases in group and transient demand.

The increase in the Key West market was primarily driven by Casa Marina Key West, Curio Collection, which experienced increases in both occupancy and ADR of 48.2 percentage points and 13.9%, respectively, for the three months ended June 30, 2024 and 27.3 percentage points and 17.1%, respectively, for the six months ended June 30, 2024 following a comprehensive renovation of the hotel that started in May 2023 when the hotel suspended operations, with all rooms reopened by December 2023.

The Signia by Hilton Orlando Bonnet Creek benefited from increases in group demand resulting in increases in occupancy and ADR of 3.3 percentage points and 4.1%, respectively, for the three months ended June 30, 2024 and 4.3 percentage points and 6.6%, respectively, for the six months ended June 30, 2024 compared to the same periods in 2023, following completion of the ballroom expansion project in early 2024.

The New York Hilton Midtown benefited from an increase in group demand resulting in increases in occupancy and ADR of 1.9 percentage points and 1.9%, respectively, for the three months ended June 30, 2024 and 3.8 percentage points and 1.9%, respectively, for the six months ended June 30, 2024 compared to the same periods in 2023.

Combined occupancy and ADR at our Boston hotels increased 3.5 percentage points and 5.7%, respectively, for the three months ended June 30, 2024 and 3.6 percentage points and 4.4%, respectively, for the six months ended June 30, 2024 compared to the same periods in 2023 due to increases in group and transient demand.

These increases were partially offset by decreases in hotel revenues and operating expenses at our two Hawaii hotels where combined occupancy decreased 6.2 percentage points and 2.1 percentage points for the three and six months ended June 30, 2024, respectively, compared to the same periods in 2023 due to decreases in transient demand, despite increases in group demand, primarily at the Hilton Hawaiian Village Waikiki Beach Resort.

The increases in hotel revenues and operating expenses for our comparable hotels during the three and nine months ended September 30, 2024, as compared to the same periods in 2023, were primarily attributable to our hotels in the Orlando, Key West, Chicago, New Orleans, Boston and New York markets.

Our Orlando hotels both benefited from an increase in group demand after the completion of the ballroom expansion project in early 2024, resulting in increases in occupancy and ADR of 1.4 percentage points and 7.0%, respectively, for the three months ended September 30, 2024 and 3.3 percentage points and 6.9%, respectively, for the nine months ended September 30, 2024 compared to the same periods in 2023 at the Signia by Hilton Orlando Bonnet Creek.

The Waldorf Astoria Orlando benefited from increases in both group and transient demand, resulting in increases in occupancy and ADR of 17.0 percentage points and 6.9%, respectively, for the three months ended September 30, 2024 and 4.9 percentage points and 4.3%, respectively, for the nine months ended September 30, 2024 compared to the same periods in 2023.

The increases in the Key West market were driven by the Casa Marina Key West, Curio Collection, which was closed during the entirety of the third quarter of 2023 for a comprehensive renovation of the hotel that started in May 2023 when the hotel suspended operations, with all rooms reopening by December 2023.

The Hilton Chicago and the Hilton New Orleans Riverside both benefited from increased group demand, with occupancy and ADR at the Hilton Chicago increasing 12.9 percentage points and 0.9%, respectively, for the three months

ended September 30, 2024 and 6.7 percentage points and 0.2%, respectively, for the nine months ended September 30, 2024 compared to the same periods in 2023.

Occupancy and ADR at the Hilton New Orleans Riverside increased 7.9 percentage points and 10.1%, respectively, for the three months ended September 30, 2024 and 3.5 percentage points and 2.3%, respectively, for the nine months ended September 30, 2024 compared to the same periods in 2023.

Combined occupancy and ADR at our Boston hotels increased 1.5 percentage points and 5.2%, respectively, for the three months ended September 30, 2024 and 2.9 percentage points and 4.6%, respectively, for the nine months ended September 30, 2024 compared to the same periods in 2023 due to increases in transient demand.

The New York Hilton Midtown benefited from increases in group and transient demand, resulting in increases in occupancy and ADR of 2.1 percentage points and 1.3%, respectively, for the nine months ended September 30, 2024, while occupancy and ADR remained relatively flat for the three months ended September 30, 2024, compared to the same periods in 2023.

These increases were partially offset by decreases in hotel revenues and operating expenses at our two Hawaii hotels where combined occupancy decreased 5.0 percentage points and 3.1 percentage points for the three and nine months ended September 30, 2024, respectively, compared to the same periods in 2023 due to a decrease in transient demand.

Corporate general and administrative

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 Percent Change 2024 2023 Percent Change

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Share-based compensation expense 5 5 — 14 14 —

Other items 2 1 100.0 2 2 —

Other corporate expenses 1 — 100.0 3 2 50.0

Total corporate general and administrative $ 17 $ 18 (5.6) % $ 52 $ 50 4.0 %

Impairment and casualty loss

During the three and six months ended June 30, 2024, we recognized impairment losses of approximately $7 million and $12 million, respectively, related to two of our hotels subject to ground leases and our inability to recover the carrying value of the assets over the remaining lease term.

During the nine months ended September 30, 2024, we recognized impairment losses of approximately $12 million related to two of our hotels subject to ground leases and our inability to recover the carrying value of the assets over the remaining lease term.

Refer to Note 7:

"Fair Value Measurements" in our unaudited condensed consolidated financial statements included elsewhere within this Quarterly Report on Form 10-Q for additional information.

During the three and six months ended June 30, 2023, we recognized an impairment loss of approximately $202 million.

During the nine months ended September 30, 2023, we recognized an impairment loss of approximately $202 million.

Refer to Note 7:

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Gain on sale of assets, net

During the six months ended June 30, 2023, we recognized a net gain of $15 million from the sale of one consolidated hotel.

During the nine months ended September 30, 2023, we recognized a net gain of $15 million from the sale of one consolidated hotel.

Gain on derecognition of assets

During the three and six months ended June 30, 2024, we recognized a gain of $15 million and $29 million, respectively, from the accrued interest expense associated with the default of the SF Mortgage Loan, which resulted in a corresponding increase of the contract asset in our condensed consolidated balance sheets, as we expect to be released from this obligation upon final resolution with the lender.

During the three and nine months ended September 30, 2024, we recognized a gain of $15 million and $44 million, respectively, from the accrued interest expense associated with the default of the SF Mortgage Loan, which resulted in a corresponding increase of the contract asset in our condensed consolidated balance sheets, as we expect to be released from this obligation upon final resolution with the lender.

Non-operating Income and Expenses

Interest income

Interest income decreased $5 million and $10 million during the three and six months ended June 30, 2024, respectively, compared to the same period in 2023 primarily as a result of a decrease in average cash balances.

Interest income decreased $3 million and $13 million during the three and nine months ended September 30, 2024, respectively, compared to the same periods in 2023 primarily as a result of a decrease in average cash balances.

Interest expense

Interest expense increased $2 million and $3 million, respectively during the three and six months ended June 30, 2024 compared to the same periods in 2023 due to the issuance of the 2030 Senior Notes and the 2024 Term Loan, partially offset by the repurchase and redemption of all the 2025 Senior Notes.

Interest expense associated with our debt for the three and six months ended June 30, 2024 and 2023 were as follows:

Interest expense increased $3 million and $6 million, respectively during the three and nine months ended September 30, 2024 compared to the same periods in 2023 due to the issuance of the $550 million of senior notes due in 2030 ("2030 Senior Notes") and the $200 million senior unsecured term loan facility due May 2027 ("2024 Term Loan"), partially offset by the repurchase and redemption of all the $650 million senior notes due in 2025 ("2025 Senior Notes").

Interest expense associated with our debt for the three and nine months ended September 30, 2024 and 2023 were as follows:

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 Percent Change 2024 2023 Percent Change

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Interest expense associated with hotels in receivership

Interest expense on the SF Mortgage Loan increased $6 million and $12 million for the three and six months ended June 30, 2024, respectively, compared to the same period in 2023 due to accrued default interest beginning in June 2023 when we ceased making payments on the loan.

Interest expense on the SF Mortgage Loan increased $1 million and $13 million for the three and nine months ended September 30, 2024, respectively, compared to the same periods in 2023 due to accrued default interest beginning in June 2023 when we ceased making payments on the loan.

The stated rate on the loan is 4.11%, however, beginning June 1, 2023, the default interest rate on the loan is 7.11%.

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Other (loss) gain, net

During the three months ended June 30, 2024, we recognized a loss of approximately $3 million related to the write-off of the remaining unamortized deferred financing costs associated with the repurchase and redemption of all the 2025 Senior Notes.

During the three months ended June 30, 2023, we recognized a gain of approximately $4 million for an early termination fee received from the lessor to terminate the lease for the Embassy Suites Phoenix Airport hotel.

Income tax benefit (expense)

During the three and six months ended June 30, 2024, we recognized an income tax benefit of $12 million and $11 million, respectively, which is primarily associated with the effective exit from the Hilton San Francisco Hotels and the reversal of $14 million of tax expense that is no longer expected to be incurred.

During the three and six months ended June 30, 2023, we recognized income tax expense of $3 million and $5 million, respectively, which was primarily related to taxable income from our TRSs.

During the nine months ended September 30, 2024, we recognized a loss of approximately $4 million, which was primarily related to the write-off of the remaining unamortized deferred financing costs associated with the repurchase and redemption of all the 2025 Senior Notes.

During the nine months ended September 30, 2023, we recognized a gain of approximately $4 million for an early termination fee received from the lessor to terminate the lease for the Embassy Suites Phoenix Airport hotel.

Equity in earnings from investments in affiliates

Equity in earnings from investments in affiliates increased $26 million and $20 million for the three and nine months ended September 30, 2024, respectively, compared to the same periods in 2023 primarily due to a $19 million gain from the sale of the Hilton La Jolla Torrey Pines.

Income tax (expense) benefit

During the three months ended September 30, 2024, we recognized income tax expense of $2 million, which was primarily related to taxable income from our TRSs.

During the nine months ended September 30, 2024, we recognized an income tax benefit of $9 million, which was primarily associated with the effective exit from the Hilton San Francisco Hotels and the reversal of $14 million of tax expense that is no longer expected to be incurred.

During the nine months ended September 30, 2023, we recognized income tax expense of $5 million, which was primarily related to taxable income from our TRSs.

Liquidity and Capital Resources

We seek to maintain sufficient amounts of liquidity with an appropriate balance of cash, debt and equity to provide financial flexibility.

As of June 30, 2024, we had total cash and cash equivalents of $449 million and $35 million of restricted cash.

As of September 30, 2024, we had total cash and cash equivalents of $480 million and $38 million of restricted cash.

Restricted cash primarily consists of cash restricted as to use by our debt agreements and reserves for capital expenditures in accordance with certain of our management agreements.

During the second quarter of 2024, we continued to experience improvements in overall demand across our portfolio and expect the improvement to continue through 2024 based on current demand trends, including an increase in city-wide events and from international travel.

During the third quarter of 2024, we continued to experience improvements in overall demand across our portfolio and expect the improvement to continue through the remainder of 2024 based on current demand trends, including an increase in city-wide events and from international travel.

We continue to mitigate the effects of macroeconomic and inflationary pressures through active asset management.

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Our known short-term liquidity requirements primarily consist of funds necessary to pay for operating expenses and other expenditures, including reimbursements to our hotel manager for payroll and related benefits, costs associated with the operation of our hotels, interest and contractually due principal payments on our outstanding indebtedness, capital expenditures for in-progress renovations and maintenance at our hotels, corporate general and administrative expenses and dividends to our stockholders.

In April 2024, we declared a second quarter dividend of $0.25 per share that was paid on July 15, 2024 to stockholders of record as of June 28, 2024.

In addition, we declared a third quarter dividend of $0.25 per share in July 2024 to be paid on October 15, 2024 to stockholders of record as of September 30, 2024.

In July 2024, we declared a third quarter dividend of $0.25 per share that was paid on October 15, 2024 to stockholders of record as of September 30, 2024.

Many of the other expenses associated with our hotels are relatively fixed, including portions of rent expense, property taxes and insurance.

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Our commitments to fund capital expenditures for renovations and maintenance at our hotels will be funded by cash and cash equivalents, restricted cash to the extent permitted by our lending agreements and cash flow from operations.

We have construction contract commitments of approximately $111 million for capital expenditures at our properties, of which $34 million relates to guestroom renovations at the Hilton Hawaiian Village Waikiki Beach Resort, $22 million relates to guestroom renovations at the Hilton Waikoloa Village and $11 million relates to guestroom renovations at the Hilton New Orleans Riverside.

We have construction contract commitments of approximately $113 million for capital expenditures at our properties, of which $34 million relates to guestroom renovations at the Hilton Hawaiian Village Waikiki Beach Resort, $19 million relates to guestroom renovations at the Hilton Waikoloa Village and $6 million relates to guestroom renovations at the

Hilton New Orleans Riverside.

Our contracts contain clauses that allow us to cancel all or some portion of the work.

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In February 2023, our Board of Directors authorized and approved a stock repurchase program allowing us to repurchase up to $300 million of our common stock over a two-year period ending in February 2025, subject to any applicable limitations or restrictions set forth in our credit facility and indentures related to our Senior Notes.

repurchases may be made through open market purchases, including through Rule 10b5-1 trading programs, in privately negotiated transactions, or in such other manner that would comply with applicable securities laws.

Stock repurchases may be made through open market purchases, including through Rule 10b5-1 trading programs, in privately negotiated transactions, or in such other manner that would comply with applicable securities laws.

The timing of any future stock repurchases and the number of shares to be repurchased will depend upon prevailing market conditions and other factors, and we may suspend the repurchase program at any time.

During the three months ended June 30, 2024, we repurchased approximately 1.7 million shares of our common stock for a total purchase price of $25 million.

As of June 30, 2024, $125 million remained available for stock repurchases.

During the three and nine months ended September 30, 2024, we repurchased approximately 2.5 million and 4.2 million shares of our common stock for a total purchase price of $35 million and $60 million, respectively.

As of September 30, 2024, $90 million remained available for stock repurchases.

Sources and Uses of Our Cash and Cash Equivalents

The following tables summarize our net cash flows and key metrics related to our liquidity:

Six Months Ended June 30,

Nine Months Ended September 30,

2024 2023 Percent Change

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Cash flow from operating activities are primarily generated from the operating income generated at our hotels.

The $41 million decrease in net cash provided by operating activities for the six months ended June 30, 2024 compared to the six months ended June 30, 2023 was primarily due to an increase of $10 million in cash paid for taxes, a decrease in interest received of $9 million due to a decrease in average cash balances and timing of receipts from our customers and payments to our vendors and other third parties.

The $28 million decrease in net cash provided by operating activities for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023 was primarily due to an increase of $9 million in cash paid for taxes, a decrease in interest received of $13 million due to a decrease in average cash balances and timing of receipts from our customers and payments to our vendors and other third parties.

Investing Activities

The $121 million in net cash used in investing activities for the six months ended June 30, 2024 was attributable to capital expenditures.

The $20 million in net cash used in investing activities for the six months ended June 30, 2023 was primarily attributable to $135 million in capital expenditures and land acquisitions, partially offset by $116 million of net proceeds from the sale of one of our hotels.

The $134 million in net cash used in investing activities for the nine months ended September 30, 2024 was attributable to $164 million of capital expenditures, partially offset by $33 million of distributions from unconsolidated affiliates primarily related to the sale of the Hilton La Jolla Torrey Pines.

The $91 million in net cash used in investing activities for the nine months ended September 30, 2023 was primarily attributable to $206 million in capital expenditures and land acquisitions, partially offset by $116 million of net proceeds from the sale of one of our hotels.

Financing Activities

The $354 million in net cash used in financing activities for the six months ended June 30, 2024 was primarily attributable to the issuance of $550 million of 2030 Senior Notes and the $200 million 2024 Term Loan, offset by $654 million of debt repayments, the repurchase of approximately 1.7 million shares of our common stock for $25 million and $407 million of dividends paid.

The $327 million in net cash used in financing activities for the six months ended June 30, 2023 was primarily attributable to $130 million of debt repayments, the repurchase of approximately 8.8 million shares of our common stock for $105 million and $88 million of dividends paid.

The $447 million in net cash used in financing activities for the nine months ended September 30, 2024 was primarily attributable to the issuance of $550 million of 2030 Senior Notes and the $200 million 2024 Term Loan, offset by $656 million of debt repayments, $459 million of dividends paid and the repurchase of approximately 4.2 million shares of our common stock for $60 million.

The $439 million in net cash used in financing activities for the nine months ended September 30, 2023 was primarily attributable to the repurchase of approximately 14.6 million shares of our common stock for approximately $180 million, $132 million of debt repayments and $120 million of dividends paid.

As a REIT, we are required to distribute at least 90% of our REIT taxable income, determined without regard to the deduction for dividends paid and excluding net capital gains, to our stockholders on an annual basis.

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September 30, 2024 October 15, 2024 $ 0.25

As of June 30, 2024, our total indebtedness was approximately $3.9 billion, including over $2 billion of our Senior Notes, and excluding both the $725 million SF Mortgage Loan (that we ceased making debt service payments in June 2023) and approximately $157 million of our share of debt from investments in affiliates (which excludes approximately $17 million of our share of debt that was repaid in connection with the sale of the Hilton La Jolla Torrey Pines in July 2024).

As of September 30, 2024, our total indebtedness was approximately $3.9 billion, including over $2 billion of our Senior Notes, and excluding both the $725 million SF Mortgage Loan (that we ceased making debt service payments in June 2023) and approximately $157 million of our share of debt from investments in affiliates.

Substantially all the debt of such unconsolidated affiliates is secured solely by the affiliates’ assets or is guaranteed by other partners without recourse to us.

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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