UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q



☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, ~~2020~~2021



☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-35074

SUMMIT HOTEL PROPERTIES, INC.

(Exact name of registrant as specified in its charter)



Maryland						27-2962512
(State or other jurisdiction						(I.R.S. Employer Identification No.)
of incorporation or organization)

13215 Bee Cave Parkway, Suite B-300

Austin,, TX78738

(Address of principal executive offices, including zip code)

(~~512~~) (512) 538-2300

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, $0.01 par value

INN

New York Stock Exchange

Series D Cumulative Redeemable Preferred Stock, $0.01 par value

INN-PD

New York Stock Exchange

Series E Cumulative Redeemable Preferred Stock, $0.01 par value

INN-PE

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405) of this chapter during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). ☒ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):



Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.			☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No

As of ~~April 30, 2020,~~May 1, 2021, the number of outstanding shares of common stock of Summit Hotel Properties, Inc. was ~~105,603,023.~~

106,121,214.

TABLE OF CONTENTS



		Page
PART I — FINANCIAL INFORMATION

Item 1.	Financial Statements	1

	Condensed Consolidated Balance Sheets — March ~~31, 2020~~ 3 1 , 202 1 (Unaudited) and December 31, ~~2019~~20 20	1
	Condensed Consolidated Statements of Operations (Unaudited) — Three Months Ended March ~~31, 2020~~ 3 1 , 202 1 and ~~2019~~20 20	2
	Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) — Three Months Ended March ~~31, 2020~~ 3 1 , 202 1 and ~~2019~~20 20	3
	Condensed Consolidated Statements of Changes in Equity (Unaudited) — Three Months Ended March 31, ~~2020~~2021 and ~~2019~~ 2020	4
	Condensed Consolidated Statements of Cash Flows (Unaudited) — Three Months Ended March ~~31, 2020~~ 3 1 , 202 1 and ~~2019~~2 02 0	5
	Notes to the Condensed Consolidated Financial Statements (Unaudited)	6

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	3031

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	4847

Item 4.	Controls and Procedures	4948

PART II — OTHER INFORMATION

Item 1.	Legal Proceedings	5049

Item 1A.	Risk Factors	5049

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	5049

Item 3.	Defaults Upon Senior Securities	5149

Item 4.	Mine Safety Disclosures	5149

Item 5.	Other Information	5149

Item 6.	Exhibits	5250

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

Summit Hotel Properties, Inc.

Condensed Consolidated Balance Sheets

(in thousands, except share amounts)


	March 31, 2020			December 31, 2019				March 31, 2021		December 31, 2020
	(Unaudited)							(Unaudited)
ASSETS							ASSETS
Investment in hotel properties, net	$	2,169,314		$	2,184,232		Investment in hotel properties, net	$	2,084,284	$	2,105,946

Undeveloped land	1,500			1,500			Undeveloped land	1,500		1,500
Assets held for sale, net	425			425			Assets held for sale, net	425		425
Cash and cash equivalents	131,267			42,238			Cash and cash equivalents	27,356		20,719
Restricted cash	28,597			27,595			Restricted cash	20,032		18,177
Investment in real estate loans, net	28,958			30,936			Investment in real estate loans, net	23,168		23,689
Right-of-use assets, net	29,577			29,884			Right-of-use assets, net	28,032		28,420
Trade receivables, net	11,356			13,281			Trade receivables, net	14,715		11,775
Prepaid expenses and other	8,297			8,844			Prepaid expenses and other	9,142		9,763

Deferred charges, net	4,594			4,709			Deferred charges, net	4,311		4,429

Other assets	9,235			12,039			Other assets	8,140		8,176
Total assets	$	2,423,120		$	2,355,683		Total assets	$	2,221,105	$	2,233,019
LIABILITIES AND EQUITY							LIABILITIES AND EQUITY
Liabilities:							Liabilities:
Debt, net of debt issuance costs	$	1,135,019		$	1,016,163		Debt, net of debt issuance costs	$	1,140,214	$	1,094,745
Lease liabilities	19,384			19,604
Lease liabilities, net							Lease liabilities, net	18,123		18,438
Accounts payable	5,725			4,767			Accounts payable	3,268		2,674
Accrued expenses and other	76,097			71,759			Accrued expenses and other	58,890		65,099

Total liabilities	1,236,225			1,112,293			Total liabilities	1,220,495		1,180,956
Commitments and contingencies (Note 10)							Commitments and contingencies (Note 10)	0		0
Equity:							Equity:
Preferred stock, $0.01 par value per share, 100,000,000 shares authorized:							Preferred stock, $0.01 par value per share, 100,000,000 shares authorized:
6.45% Series D - 3,000,000 shares issued and outstanding at March 31, 2020 and December 31, 2019 (aggregate liquidation preference of $75,417 at March 31, 2020 and December 31, 2019, respectively)	30			30
6.25% Series E - 6,400,000 shares issued and outstanding at March 31, 2020 and December 31, 2019 (aggregate liquidation preference of $160,861 at March 31, 2020 and December 31, 2019, respectively)	64			64
Common stock, $0.01 par value per share, 500,000,000 shares authorized, 105,574,400 and 105,169,515 shares issued and outstanding at March 31, 2020 and December 31, 2019, respectively	1,056			1,052

6.45% Series D - 3,000,000 shares issued and outstanding at March 31, 2021 and December 31, 2020 (aggregate liquidation preference of $75,417 at March 31, 2021 and December 31, 2020)							6.45% Series D - 3,000,000 shares issued and outstanding at March 31, 2021 and December 31, 2020 (aggregate liquidation preference of $75,417 at March 31, 2021 and December 31, 2020)	30		30
6.25% Series E - 6,400,000 shares issued and outstanding at March 31, 2021 and December 31, 2020 (aggregate liquidation preference of $160,861 at March 31, 2021 and December 31, 2020)							6.25% Series E - 6,400,000 shares issued and outstanding at March 31, 2021 and December 31, 2020 (aggregate liquidation preference of $160,861 at March 31, 2021 and December 31, 2020)	64		64
Common stock, $0.01 par value per share, 500,000,000 shares authorized, 106,118,714 and 105,708,787 shares issued and outstanding at March 31, 2021 and December 31, 2020, respectively							Common stock, $0.01 par value per share, 500,000,000 shares authorized, 106,118,714 and 105,708,787 shares issued and outstanding at March 31, 2021 and December 31, 2020, respectively	1,061		1,057
Additional paid-in capital	1,191,964			1,190,949			Additional paid-in capital	1,176,150		1,197,320
Accumulated other comprehensive loss	(35,044		)	(16,034		)	Accumulated other comprehensive loss	(24,523)		(30,716)
Distributions in excess of retained earnings	(39,868		)	(2,283		)
Accumulated deficit and distributions in excess of retained earnings							Accumulated deficit and distributions in excess of retained earnings	(213,999)		(179,013)
Total stockholders’ equity	1,118,202			1,173,778			Total stockholders’ equity	938,783		988,742
Non-controlling interests in operating partnership	1,658			1,809			Non-controlling interests in operating partnership	1,069		1,111
Non-controlling interests in joint venture (Note 8)	67,035			67,803			Non-controlling interests in joint venture (Note 8)	60,758		62,210
Total equity	1,186,895			1,243,390			Total equity	1,000,610		1,052,063
Total liabilities and equity	$	2,423,120		$	2,355,683		Total liabilities and equity	$	2,221,105	$	2,233,019

See Notes to the Condensed Consolidated Financial Statements

Summit Hotel Properties, Inc.

Condensed Consolidated Statements of Operations

(Unaudited)

(in thousands, except per share amounts)


	For the Three Months Ended March 31,							For the Three Months Ended March 31,
	2020			2019				2021		2020
Revenues:							Revenues:
Room	$	98,603		$	128,100		Room	$	53,245	$	98,603
Food and beverage	4,884			6,020			Food and beverage	1,003		4,884
Other	4,898			4,832			Other	3,606		4,898
Total revenues	108,385			138,952			Total revenues	57,854		108,385
Expenses:							Expenses:
Room	24,573			27,840			Room	12,550		24,573
Food and beverage	4,037			4,538			Food and beverage	556		4,037
Other hotel operating expenses	35,283			39,859			Other hotel operating expenses	24,574		35,283
Property taxes, insurance and other	11,698			11,408			Property taxes, insurance and other	10,904		11,698
Management fees	3,072			5,146			Management fees	1,555		3,072
Depreciation and amortization	27,079			25,536			Depreciation and amortization	27,297		27,079
Corporate general and administrative	4,668			5,990			Corporate general and administrative	5,678		4,668

Provision for credit losses	2,530			—			Provision for credit losses	0		2,530
Loss on impairment of assets	782			—
Loss on impairment and write-off of assets							Loss on impairment and write-off of assets	0		782
Total expenses	113,722			120,317			Total expenses	83,114		113,722
(Loss) gain on disposal of assets, net	(3		)	4,166
Operating (loss) income	(5,340		)	22,801
Gain (loss) on disposal of assets, net							Gain (loss) on disposal of assets, net	50		(3)
Operating loss							Operating loss	(25,210)		(5,340)
Other income (expense):							Other income (expense):
Interest expense	(11,012		)	(10,852		)	Interest expense	(10,788)		(11,012)
Other income, net	2,106			1,301			Other income, net	3,232		2,106
Total other income (expense)	(8,906		)	(9,551		)	Total other income (expense)	(7,556)		(8,906)
(Loss) income from continuing operations before income taxes	(14,246		)	13,250
Loss from continuing operations before income taxes							Loss from continuing operations before income taxes	(32,766)		(14,246)
Income tax expense (Note 12)	(1,968		)	(350		)	Income tax expense (Note 12)	(105)		(1,968)
Net (loss) income	(16,214		)	12,900
Less - Loss (income) attributable to non-controlling interests:
Net loss							Net loss	(32,871)		(16,214)
Less - Loss attributable to non-controlling interests:							Less - Loss attributable to non-controlling interests:
Operating Partnership	37			(23		)	Operating Partnership	54		37
Joint venture	855			—			Joint venture	1,452		855
Net (loss) income attributable to Summit Hotel Properties, Inc.	(15,322		)	12,877
Net loss attributable to Summit Hotel Properties, Inc.							Net loss attributable to Summit Hotel Properties, Inc.	(31,365)		(15,322)
Preferred dividends	(3,709		)	(3,709		)	Preferred dividends	(3,709)		(3,709)
Net (loss) income attributable to common stockholders	$	(19,031	)	$	9,168
(Loss) earnings per share:

Net loss attributable to common stockholders							Net loss attributable to common stockholders	$	(35,074)	$	(19,031)
Loss per share:							Loss per share:
Basic and diluted	$	(0.18	)	$	0.09		Basic and diluted	$	(0.34)	$	(0.18)

Weighted average common shares outstanding:							Weighted average common shares outstanding:
Basic	103,995			103,749
Diluted	103,995			103,837
Basic and diluted							Basic and diluted	104,278		103,995

See Notes to the Condensed Consolidated Financial Statements

Summit Hotel Properties, Inc.

Condensed Consolidated Statements of Comprehensive Income (Loss)

(Unaudited)

(in thousands)

For the
Three Months Ended
March 31,
2020 2019
Net (loss) income $ (16,214 ) $ 12,900
Other comprehensive (loss) income, net of tax:

Changes in fair value of derivative financial instruments (19,044 ) (5,558 )
Comprehensive (loss) income (35,258 ) 7,342
Less - Comprehensive loss (income) attributable to non-controlling interests:

Operating Partnership 74
(9 )
Joint venture 855
—
Comprehensive (loss) income attributable to Summit Hotel Properties, Inc. (34,329 ) 7,333
Preferred dividends (3,709 ) (3,709 )
Comprehensive (loss) income attributable to common stockholders $ (38,038 ) $ 3,624


	For the Three Months Ended March 31,
	2021		2020
Net loss	$	(32,871)	$	(16,214)
Other comprehensive income (loss), net of tax:
Changes in fair value of derivative financial instruments	6,203		(19,044)
Comprehensive loss	(26,668)		(35,258)
Less - Comprehensive loss attributable to non-controlling interests:
Operating Partnership	44		74
Joint venture	1,452		855
Comprehensive loss attributable to Summit Hotel Properties, Inc.	(25,172)		(34,329)
Preferred dividends	(3,709)		(3,709)

Comprehensive loss attributable to common stockholders	$	(28,881)	$	(38,038)

See Notes to the Condensed Consolidated Financial Statements

Summit Hotel Properties, Inc.

Condensed Consolidated Statements of Changes in Equity

For the Three Months Ended March 31, ~~2020~~2021 and ~~2019~~2020

(Unaudited)

(in thousands, except share amounts)


																																								Shares of Preferred Stock					Preferred Stock					Shares of Common Stock			Common Stock				Additional Paid-In Capital				Accumulated Other Comprehensive Loss				Accumulated Deficit and Distributions in Excess of Retained Earnings					Total Stockholders’ Equity				Non-controlling Interests								Total Equity
																																																											Operating Partnership								Joint Venture
Balance at December 31, 2020																																					Balance at December 31, 2020					9,400,000									$	94					105,708,787				$	1,057			$	1,197,320				$	(30,716)			$	(179,013)			$	988,742			$	1,111			$	62,210			$	1,052,063

	Shares of Preferred Stock		Preferred Stock		Shares of Common Stock			Common Stock			Additional Paid-In Capital				Accumulated Other Comprehensive Income (Loss)				Retained Earnings and Distributions				Total Stockholders’ Equity			Non-controlling Interests								Total Equity
							Operating Partnership							Joint Venture
Purchases of capped call options																																					Purchases of capped call options			—					—					—			—				(21,131)				—				—					(21,131)				—				—				(21,131)

Dividends																																					Dividends			—					—					—			—				—				—				(3,621)					(3,621)				—				—				(3,621)
Equity-based compensation																																					Equity-based compensation			—					—					565,532			6				1,561				—				—					1,567				2				—				1,569
Shares acquired for employee withholding requirements																																					Shares acquired for employee withholding requirements			—					—					(155,605)			(2)				(1,600)				—				—					(1,602)				—				—				(1,602)

Other comprehensive income																																					Other comprehensive income			—					—					—			—				—				6,193				—					6,193				10				—				6,203
Net loss																																					Net loss			—					—					—			—				—				—				(31,365)					(31,365)				(54)				(1,452)				(32,871)
Balance at March 31, 2021																																					Balance at March 31, 2021			9,400,000					$	94				106,118,714			$	1,061			$	1,176,150			$	(24,523)			$	(213,999)				$	938,783			$	1,069			$	60,758			$	1,000,610

Balance at December 31, 2019		9,400,000					$			94		105,169,515					$	1,052			$	1,190,949					$	(16,034	)		$	(2,283	)					$	1,173,778	$	1,809		$	67,803			$	1,243,390	Balance at December 31, 2019			9,400,000			$	94				105,169,515			$	1,052				$	1,190,949			$	(16,034)			$	(2,283)			$	1,173,778			$	1,809			$	67,803			$	1,243,390
Contribution by non-controlling interests in joint venture	—		—		—			—			—				—				—				—			—				577				577

Contribution by non-controlling interest in joint venture																																					Contribution by non-controlling interest in joint venture			—					—					—			—				—				—				—					—				—				577				577
Common stock redemption of common units	—		—		4,956			—			46				(3		)		—				43			(43		)		—				—			Common stock redemption of common units			—					—					4,956			—				46				(3)				—					43				(43)				—				—

Dividends	—		—		—			—			—				—				(22,263		)		(22,263		)	(37		)		(490		)		(22,790		)	Dividends			—					—					—			—				—				—				(22,263)					(22,263)				(37)				(490)				(22,790)
Equity-based compensation	—		—		465,274			5			1,467				—				—				1,472			3				—				1,475			Equity-based compensation			—					—					465,274			5				1,467				—				—					1,472				3				—				1,475
Shares acquired for employee withholding requirements	—		—		(65,345	)		(1		)	(468		)		—				—				(469		)	—				—				(469		)	Shares acquired for employee withholding requirements			—					—					(65,345)			(1)				(468)				—				—					(469)				—				—				(469)
Other	—		—		—			—			(30		)		—				—				(30		)	—				—				(30		)	Other			—					—					—			—				(30)				—				—					(30)				—				—				(30)
Other comprehensive loss	—		—		—			—			—				(19,007		)		—				(19,007		)	(37		)		—				(19,044		)	Other comprehensive loss			—					—					—			—				—				(19,007)				—					(19,007)				(37)				—				(19,044)
Net loss	—		—		—			—			—				—				(15,322		)		(15,322		)	(37		)		(855		)		(16,214		)	Net loss			—					—					—			—				—				—				(15,322)					(15,322)				(37)				(855)				(16,214)
Balance at March 31, 2020	9,400,000		$	94	105,574,400			$	1,056		$	1,191,964			$	(35,044	)		$	(39,868	)		$	1,118,202		$	1,658			$	67,035			$	1,186,895		Balance at March 31, 2020			9,400,000					$	94				105,574,400			$	1,056			$	1,191,964			$	(35,044)			$	(39,868)				$	1,118,202			$	1,658			$	67,035			$	1,186,895

Balance at December 31, 2018	9,400,000		$	94	104,783,179			$	1,048		$	1,185,310			$	(1,441	)		$	4,838			$	1,189,849		$	2,295			$	—			$	1,192,144
Dividends	—		—		—			—			—				—				(21,956		)		(21,956		)	(47		)		—				(22,003		)
Equity-based compensation	—		—		370,826			4			1,345				—				—				1,349			3				—				1,352
Shares acquired for employee withholding requirements	—		—		(73,892	)		(1		)	(833		)		—				—				(834		)	—				—				(834		)
Other	—		—		—			—			(32		)		—				—				(32		)	—				—				(32		)
Other comprehensive loss	—		—		—			—			—				(5,544		)		—				(5,544		)	(14		)		—				(5,558		)
Net income	—		—		—			—			—				—				12,877				12,877			23				—				12,900
Balance at March 31, 2019	9,400,000		$	94	105,080,113			$	1,051		$	1,185,790			$	(6,985	)		$	(4,241	)		$	1,175,709		$	2,260			$	—			$	1,177,969



Level 1:						Observable inputs such as quoted prices in active markets.
Level 2:						Directly or indirectly observable inputs, other than quoted prices in active markets.
Level 3:						Unobservable inputs in which there is little or no market information, which require a reporting entity to develop its own assumptions.

Assets and liabilities measured at fair value are based on one or more of the following valuation techniques:



Market approach:						Prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities.
Cost approach:						Amount required to replace the service capacity of an asset (replacement cost).
Income approach:						Techniques used to convert future amounts to a single amount based on market expectations (including present-value, option-pricing, and excess-earnings models).

Our estimates of fair value were determined using available market information and appropriate valuation methods. Considerable judgment is necessary to interpret market data and develop estimated fair value. The use of different market assumptions or estimation methods may have a material effect on the estimated fair value amounts. We classify assets and liabilities in the fair value hierarchy based on the lowest level of input that is significant to the fair value measurement.

We have elected a measurement alternative for equity investments, such as our purchase options, that do not have readily determinable fair values. Under the alternative, our purchase options are measured at cost, less any impairment, plus or minus changes resulting from observable price changes in orderly transactions for an identical or similar investment of the same issuer, if any.

Non-controlling Interests

Non-controlling interests represent the portion of equity in a consolidated entity held by owners other than the consolidating parent. Non-controlling interests are reported in the Condensed Consolidated Balance Sheets within equity, separately from stockholders’ equity. Revenue, expenses and net income attributable to both the Company and the non-controlling interests are reported in the Condensed Consolidated Statements of Operations.

Our Condensed Consolidated Financial Statements include non-controlling interests related to common units of limited partnership interests (“Common Units”) in the Operating Partnership held by unaffiliated third parties and third-party ownership of a 49% interest in a consolidated joint venture. See "Note 8 - Equity - Non-controlling Interests in Joint Venture" for further information.

Use of Estimates

Our Condensed Consolidated Financial Statements are prepared in conformity with GAAP, which requires us to make estimates based on assumptions about current and, for some estimates, future economic and market conditions that affect reported amounts and related disclosures in our Condensed Consolidated Financial Statements. Although our current estimates contemplate current and expected future conditions, as applicable, it is reasonably possible that actual conditions could materially differ from our expectations, which could materially affect our expectations for our consolidated financial position and results of operations. In particular, a number of estimates have been and will continue to be affected by the ongoing COVID-19 pandemic.

The evaluation of the carrying amounts of our assets described above requires that we make projections of the future estimated cash flows and residual values of the assets or underlying collateral based on assumptions derived from available information about future market conditions that will affect these projections. While the potential magnitude and duration of the business and economic effects of the COVID-19 pandemic are uncertain, our analysis of the future estimated cash flows, values of the assets or underlying collateral assumes that we will begin to experience a recovery in our business during the second half of 2020 and operating performance will improve gradually over a multi-year period before reaching prior peak performance levels.

The severity, magnitude and duration, of the COVID-19 pandemic, as well as its economic consequences, are uncertain, rapidly changing and difficult to predict. As such, there can be no assurance that our forecasts and underlying assumptions will be realized. As a result, our accounting estimates and assumptions may change over time, and actual results may differ materially from our expectations. We will continue to monitor the effects of the COVID-19 pandemic in future quarters. If actual results differ from our forecasts, this may result in future impairments of hotel properties, intangible assets, right-of-use assets, or investment securities such as our purchase options, or in incremental credit losses on our notes receivables.

New Accounting Standards

~~In December 2019, the FASB issued ASU No. 2019-12,~~ ~~Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, which is intended to simplify various aspects related to accounting for income taxes. ASU No. 2019-12 removes certainexceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistentapplication. ASU No. 2019-12 is effective for our fiscal year commencing on January 1, 2021, with early adoption permitted.The adoption of ASU No. 2019-12 will not have a material effect on our consolidated financial position or results of operations.~~

In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848). ASU No. 2020-04 contains practical expedients for reference rate reform related activities that affect debt, leases, derivatives and other contracts. The guidance in ASU No. 2020-04 is optional and may be elected over time as reference rate reform activities occur. During 2020, the Company ~~has~~ elected to apply the hedge accounting expedients related to probability and the assessments of effectiveness for future LIBOR-indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives. Application of these expedients preserves the presentation of derivatives consistent with past presentation. The Company continues to evaluate the effect of the guidance and may apply other elections as applicable as additional changes in the market occur.

In August 2020, the FASB issued ASU No. 2020-06, Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40) – Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. The objective of ASU No. 2020-06 is to address issues identified as a result of the complexity associated with applying generally accepted accounting principles for certain financial instruments with characteristics of liabilities and equity.

The amendments in ASU No. 2020-06 reduce the number of accounting models for convertible debt instruments and convertible preferred stock. For convertible instruments with conversion features that are not required to be accounted for as derivatives under Topic 815, Derivatives and Hedging, or that do not result in substantial premiums accounted for as paid-in capital, the embedded conversion features no longer are separated from the host contract. The amendments in ASU No. 2020-06 remove certain conditions that should be considered in the derivatives scope exception evaluation under Subtopic 815-40, Derivatives and Hedging—Contracts in Entity’s Own Equity, and clarify the scope and certain requirements under Subtopic 815-40. The amendments also improve the guidance related to the disclosures and earnings-per-share (EPS) for convertible instruments and contracts in an entity’s own equity.

ASU No. 2020-06 is effective for fiscal years beginning after December 15, 2021. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020. We elected to adopt ASU No. 2020-06 effective January 1, 2021 in connection with our Convertible Notes Offering closed on January 12, 2021 as described in "Note 5 – Debt." In accordance with the provisions of ASU No. 2020-06, we will account for the convertible notes issued in 2021 entirely as a liability and we will use the if-converted method for diluted share calculations.

NOTE 3 - INVESTMENT IN HOTEL PROPERTIES, NET

Investment in Hotel Properties, net

Investment in hotel properties, net is as follows (in thousands):


	March 31, 2021		December 31, 2020
Hotel buildings and improvements	$	2,068,117	$	2,066,986
Land	319,603		319,603
Furniture, fixtures and equipment	173,861		173,351
Construction in progress	9,881		8,903
Intangible assets	11,231		11,231
Real estate development loan	19,429		16,508
	2,602,122		2,596,582
Less - accumulated depreciation and amortization	(517,838)		(490,636)
	$	2,084,284	$	2,105,946

March 31, 2020 December 31, 2019
Hotel buildings and improvements $ 2,050,923
$ 2,049,384
Land 319,603
319,603
Furniture, fixtures and equipment 180,868
173,128
Construction in progress 10,229
9,388
Intangible assets 11,231
11,231
Real estate development loan 7,433
5,485
2,580,287
2,568,219
Less - accumulated depreciation and amortization (410,973 ) (383,987 )
$ 2,169,314
$ 2,184,232

We provided a mezzanine loan to fund up to $28.9 million for a mixed-use development project that includes a hotel property, retail space, and parking. We have classified the mezzanine loan as Investment in hotel properties, net in our Condensed Consolidated Balance Sheets at March 31, ~~2020~~2021 and December 31, ~~2019.~~2020. See "Note 4 - Investment in Real Estate Loans" for further information.

~~Asset Sales~~

We did not acquire or sell any hotel properties ~~during~~in 2020 or the three months ended March 31, ~~2020.~~2021.

On February 12, 2019, we completed the sale of 2 hotel properties, the Country Inn & Suites - Charleston, WV and the Holiday Inn Express - Charleston, WV, for an aggregate sales price of $11.6 million. The sale of these properties resulted in the realization of an aggregate gain of $4.2 million for the three months ended March 31, 2019.

~~Hotel Property Acquisitions~~

We did not acquire any hotel properties during the three months ended March 31, 2020 or 2019. On January 31, 2019, we exercised our option pursuant to a ground lease agreement to purchase the land upon which our Residence Inn by Marriott in Baltimore (Hunt Valley), MD is located for $4.2 million, which resulted in a termination of obligations under the ground lease. As a result, this hotel property is no longer subject to a ground lease.

The results of operations of acquired properties are included in the Condensed Consolidated Statements of Operations beginning on their respective acquisition dates. The following unaudited pro forma information includes operating results for 72 hotels owned as of March 31, 2020 as if all such hotels had been owned by us since January 1, 2019. For hotels acquired by us after January 1, 2019 (the "Acquired Hotels"), we have included in the pro forma information the financial results of each of the Acquired Hotels for the period prior to acquisition by us (the "Pre-acquisition Period"). The financial results for the Pre-Acquisition Period were provided by the third-party owner of such Acquired Hotel prior to purchase by us and such information has not been audited or reviewed by our auditors or adjusted by us. For hotels sold by us between January 1, 2019 and March 31, 2020 (the "Disposed Hotels"), the unaudited pro forma information excludes the financial results, including gains on disposal of assets, of each of the Disposed Hotels for the period of ownership by us from January 1, 2019 through the date that the Disposed Hotels were sold by us. The unaudited pro forma information is included to enable comparison of results for the current reporting period to results for the comparable period of the prior year and is not indicative of what actual results of operations would have been had the hotel acquisitions and dispositions taken place on or before January 1, 2019. The pro forma amounts exclude the gain or loss on the sale of hotel properties during the three months ended March 31, 2020 and 2019. This information does not purport to be indicative of or represent results of operations for future periods.

The unaudited condensed pro forma financial information for the 72 hotel properties owned at March 31, 2020 for the three months ended March 31, 2020 and 2019 is as follows (in thousands, except per share):

For the
Three Months Ended
March 31,
2020 2019
Revenues $ 108,385
$ 141,756
Income from hotel operations $ 29,725
$ 53,808
Net (loss) income ⁽¹⁾
$ (16,213 ) $ 15,603
Net (loss) income attributable to common stockholders, net of amount allocated to participating securities ⁽¹⁾
$ (19,111 ) $ 8,814
Basic and diluted net (loss) income per share attributable to common stockholders ⁽¹⁾
$ (0.18 ) $ 0.08


~~(1)~~	Pro forma amounts include depreciation expense, property tax expense, interest expense, income tax expense, loss on impairment of assets and other corporate expenses totaling $56.6 million and $47.9 million for the three months ended March 31, 2020 and 2019, respectively.

~~Assets Held for Sale~~

Assets held for sale at March 31, 2020 and December 31, 2019 included a land parcel in Flagstaff, AZ with a carrying amount of $0.4 million. The land parcel is currently under contract for sale and is expected to close prior to December 31, 2020.

NOTE 4 — INVESTMENT IN REAL ESTATE LOANS

Investment in real estate loans, net is as follows (in thousands):

March 31, 2020 December 31, 2019
Real estate loans $ 32,870
$ 32,831
Unamortized discount (1,382 ) (1,895 )
Allowance for credit losses (2,530 ) —
$ 28,958
$ 30,936


	March 31, 2021		December 31, 2020
Real estate loans	$	28,150	$	28,671

Allowance for credit losses	(4,982)		(4,982)
Investment in real estate loans, net	$	23,168	$	23,689

The amortized cost bases of our Investment in real estate loans, net approximate their fair value. ~~The amortized cost bases and fair value of our Investment in real estate loans, net at March 31, 2020, by contractual maturity are as follows: $27.0 million in 2020 and $2.0 million in 2021.~~

Real Estate Development Loans

We provided mezzanine loans on 3 real estate development projects to fund up to an aggregate of $29.6 million for the development of 3 hotel properties. The 3 real estate development loans closed in the fourth quarter of 2017 and each ~~has~~had a stated interest rate of 8%8.00% and an initial term of approximately three years. ~~Interest income on~~During the ~~mezzanine loans will be recorded in our Condensed Consolidated Statement of Operations as it is earned. As of March~~year ended December 31, 2020, ~~we have funded~~1 of the ~~full amount~~real estate loans with a principal balance of ~~$29.6 million.~~ $3.8 million was repaid in full.

We have separate options related to each outstanding loan (each the "Initial Option") to purchase a 90% interest in each joint venture that owns the respective hotel upon completion of construction. The Initial Options are exercisable while the related real estate development loan is outstanding. We also have the right to purchase the remaining interests in each joint venture at future dates, generally five years after we exercise our Initial Option. We have recorded the ~~original~~ aggregate estimated fair value of each Initial Option totaling ~~$6.1~~$4.4 million in Other ~~assets and as~~assets.

The COVID-19 pandemic has adversely affected the operations of the hotels that collateralize our mezzanine loans. As a ~~discount~~result, at March 31, 2021 we have an allowance for credit losses of $2.6 million that was recorded in March 2020, to reduce the carrying amounts of the loans to their estimated net realizable values. Additionally, in March 2021, we entered into loan modifications related to the ~~related~~2 outstanding real estate ~~loans. The discount~~development loans described above to extend the maturity date of each loan to March 31, 2022. Interest will accrue at a rate of 8.00% and will be ~~amortized as a component of non-cash interest income over~~payable quarterly throughout the ~~initial~~ term of the ~~real estate~~loan. In connection with the modifications, the borrowers paid all interest due through March 31, 2021, which interest payments were previously deferred pursuant to modifications entered into in 2020. As a result, the Company recognized interest income related to these loans ~~using the straight-line method, which approximates the interest method. We recorded amortization~~ of ~~the discount of $0.5~~$2.1 million during the three months ended March 31, ~~2020 and 2019.~~ 2021.

During the ~~three months~~year ended ~~March~~December 31, ~~2020,~~2019, we ~~recorded a Loss on impairment of assets of $0.8 million related to one of the purchase options. See~~ ~~"Note 9 - Fair Value Measurement"~~ ~~for further information.~~

We provided a mezzanine loan to fund up to $28.9 million for a mixed-use development project that includes a hotel property, retail space, and parking. The loan closed in the third quarter of 2019 and has a stated interest rate of ~~9% and an initial term of 30 months.~~9.00%. The loan is secured by a second mortgage on the development project and a pledge of the equity in the project owner. As of March 31, ~~2020,~~2021, we have funded ~~$9.5~~$20.3 million of the loan commitment. Upon completion of construction, we have an option to purchase a 90% interest in the hotel (the “Initial Purchase Option”). We also have the right to purchase the remaining interest in the hotel five years after the completion of construction. We have issued a $10.0 million letter of credit under our senior ~~unsecured~~revolving credit facility to secure the exercise of the Initial Purchase Option. As such, we have classified the loan as Investment in hotel properties, net inon our Condensed Consolidated Balance Sheets at March 31, ~~2020.~~2021. Interest income on the mezzanine loan will be recorded in our Condensed Consolidated Statement of Operations as it is earned. We have recorded the aggregate estimated fair value of the Initial Purchase Option totaling $2.8 million in Other assets and as a contra-asset to Investment in hotel properties, net. The contra-asset will be amortized as a component of non-cash interest income over the term of the real estate development loan using the straight-line method, which approximates the interest method. ~~During~~We recorded amortization of the contra-asset of $0.3 million during each of the three months ended March 31, 2021 and 2020 ~~we amortized $0.3 million~~ as non-cash interest income. Including the amortization of the contra-asset, the current effective interest rate on this loan is approximately 13.00%.

Seller-Financing Loans

On June 29, 2018, we sold the Holiday Inn in Duluth, GA and the Hilton Garden Inn in Duluth, GA for an aggregate selling price of $24.9 million. We provided seller financing totaling $3.6 million on the sale of these properties under 2, ~~3.5-year~~3.5 year second mortgage notes with a blended interest rate of 7.38% ~~secured~~that are further collateralized by a ~~$3.0 million second mortgage.~~personal guarantee from the principal of the borrower. As of March 31, ~~2020,~~2021, there was ~~$2.6~~$2.4 million outstanding on the seller-financing loans.

~~Current Estimate of Credit Losses~~

We ~~evaluated our notes receivable for potential credit losses by estimating~~are in negotiations with the ~~fair value~~borrower to secure repayment of the ~~collateral supporting each note receivable at March 31, 2020 based~~outstanding balance and unpaid interest on ~~assumptions related~~the loans. There can be no assurance that we will be successful in our negotiations with the borrower such that we will be able to ~~the expected future performance~~secure full repayment of the ~~collateral assets and the resulting anticipated net selling value of the assets at capitalization rates that are common for the asset class. Our current estimate of credit losses of $2.5 million is~~outstanding obligations. As such, we have recorded as an allowance for credit losses in an amount equal to the outstanding balance of the loans at March 31, ~~2020 as a result~~2021. Additionally, we have suspended the recognition of interest income for these loans until the ~~effects of the COVID-19 pandemic.~~cash interest payments are received.

NOTE 5 - DEBT

At March 31, ~~2020 and December 31, 2019,~~2021, our indebtedness was comprised of borrowings under our 2018 ~~Unsecured~~Senior Credit Facility (as defined below), the 2018 Term Loan (as defined below), the 2017 Term Loan (as defined below), the Joint Venture Credit Facility (as defined below), the Convertible Notes (as defined below), and indebtedness secured by first priority mortgage liens on various hotel properties. The weighted average interest rate, after giving effect to our interest rate derivatives, for all borrowings was ~~3.48%~~3.27% at March 31, ~~2020~~2021 and ~~3.95%~~3.43% at December 31, ~~2019.~~2020.

Debt, net of debt issuance costs, is as follows (in thousands):

March 31, 2020 December 31, 2019
Revolving debt $ 260,000
$ 140,000
Term loans 725,000
725,000
Mortgage loans 156,796
157,726
1,141,796
1,022,726
Unamortized debt issuance costs (6,777 ) (6,563 )
Debt, net of debt issuance costs $ 1,135,019
$ 1,016,163


	March 31, 2021		December 31, 2020
Revolving debt	$	87,500	$	222,500
Term loans	626,500		725,000
Convertible notes	287,500		0
Mortgage loans	152,993		153,978
	1,154,493		1,101,478
Unamortized debt issuance costs	(14,279)		(6,733)
Debt, net of debt issuance costs	$	1,140,214	$	1,094,745

~~On April 1, 2020, we borrowed an additional $25.0 million on our $400 Million Revolver (as defined below).~~

We have entered into interest rate swaps to partially fix the interest rates on a portion of our variable interest rate indebtedness. See "Note 7 - Derivative Financial Instruments and Hedging" to the Condensed Consolidated Financial Statements for additional information. Our total fixed-rate and variable-rate debt, after considering our interest rate derivative agreements that are currently effective, is as follows (in thousands):


	March 31, 2021		Percentage	December 31, 2020		Percentage
Fixed-rate debt	$	832,336	72%	$	545,754	50%
Variable-rate debt	322,157		28%	555,724		50%
	$	1,154,493		$	1,101,478

March 31, 2020 Percentage December 31, 2019 Percentage
Fixed-rate debt $ 548,372
48% $ 549,236
54%
Variable-rate debt 593,424
52% 473,490
46%
$ 1,141,796
$ 1,022,726

Information about the fair value of our fixed-rate debt that is not recorded at fair value is as follows (in thousands):

March 31, 2020 December 31, 2019

Carrying
Value
Fair Value
Carrying
Value
Fair Value Valuation Technique
Fixed-rate debt $ 148,372
$ 148,502
$ 149,236
$ 151,268
Level 2 - Market approach


	March 31, 2021				December 31, 2020
	Carrying Value		Fair Value		Carrying Value		Fair Value		Valuation Technique
Convertible notes	$	287,500	$	317,721	$	—	$	—	Level 1 - Market approach
Fixed-rate mortgage loans	144,836		143,685		145,754		143,244		Level 2 - Market approach
	$	432,336	$	461,406	$	145,754	$	143,244

At March 31, ~~2020~~2021 and December 31, ~~2019,~~2020, we had $400.0 million of debt with variable interest rates that had been converted to fixed interest rates through derivative financial instruments which are carried at fair value. Differences between carrying value and fair value of our fixed-rate debt are primarily due to changes in interest rates. Inherently, fixed-rate debt is subject to fluctuations in fair value as a result of changes in the current market rate of interest on the valuation date. For additional information on our use of derivatives as interest rate hedges, refer to "Note 7 - Derivative Financial Instruments and Hedging."

$600 Million Senior ~~Unsecured~~ Credit and Term Loan Facility

On December 6, 2018, the Operating Partnership, as borrower, the Company, as parent guarantor, and each party executing the loan documentation as a subsidiary guarantor, entered into a $600.0 million senior ~~unsecured~~ credit facility (the “2018 ~~Unsecured~~Senior Credit Facility”) with Deutsche Bank AG New York Branch, as administrative agent, and a syndicate of lenders. The 2018 ~~Unsecured~~Senior Credit Facility is comprised of ~~a $400.0 million revolving credit facility (the “$400~~the $400 Million ~~Revolver”)~~Revolver and a $200.0 million term loan facility (the “$200 Million Term Loan”). At March 31, ~~2020,~~2021, we had ~~$395.0~~$220.0 million borrowed and ~~$139.3~~$320.0 million available to ~~borrow.~~ borrow plus an additional $50.0 million available to borrow subject to certain security requirements to be provided to the lender.

Amendments to $600.0 Million Senior Credit Facility

Between May 2020 and February 2021, the Company entered into several amendments to the Credit Agreement of the 2018 Senior Credit Facility (the “Credit Facility Amendments”).

As of March 31, 2021, the cumulative effect of the Credit Facility Amendments resulted in the waiver or adjustment of certain financial and other covenants under the 2018 Senior Credit Facility, for the periods described below:

•Waivers of key financial and certain other covenants in the 2018 Senior Credit Facility for the period April 1, 2020 through March 31, 2021, which period was extended through March 31, 2022; and

•Beginning on April 1, 2022, adjustments to certain of the key financial covenants go into effect through December 31, 2022 including:

◦Reduction of the Minimum Consolidated Fixed Charge Coverage Ratio;

◦Increase of the Maximum Unsecured Leverage Ratio;

◦Reduction of the Minimum Unsecured Interest Coverage Ratio; and

◦Increases to the Maximum Leverage Ratio, adjusting down beginning in the second quarter of 2022 and continuing through calendar year 2023.

The interest rate on the 2018 Senior Credit Facility is based on a pricing grid ranging from 140 basis points to 240 basis points plus LIBOR for the $400 Million Revolver and 135 basis points to 235 basis points plus LIBOR for the $200 Million Term Loan, depending upon the Company's leverage ratio. The pricing grid was modified under the Credit Facility Amendments such that during the period ending December 31, 2021, or earlier at the Company's election subject to certain requirements (the "Amendment Period"), the applicable margin was at Pricing Level VII, as defined in the 2018 Senior Credit Facility documents. The applicable margin is currently set at Pricing Level VIII. The interest rate at March 31, 2021 for the $200 Million Term Loan was 2.60%.

The Credit Facility Amendments require the borrower and certain subsidiaries to pledge to the secured parties all of the equity interests in the entities that own all properties included in the unencumbered asset pool supporting the facility (“Unencumbered Properties”), as well as the equity interests in the TRS lessees related to such Unencumbered Properties until the borrower meets certain conditions for their release. The Credit Facility Amendments also permitted the Company to complete the Convertible Notes Offering (defined below).

The Credit Facility Amendments allow the borrower to advance up to $350 million on the existing revolving facility. Furthermore, the Credit Facility Amendments permit the borrower to advance an additional $50 million, in addition to the $350 million advance described in the preceding sentence, upon filing mortgages and related security agreements on all Unencumbered Properties, with such security documents to be released upon the borrower meeting certain conditions for their release.

The Credit Facility Amendments revise the restrictions that were previously placed on certain investments in assets, equity offerings and securing of permitted indebtedness to permit the borrower and Company to take such actions, provided that (i) portions of the proceeds from such events will be used to pay down the balance of the 2018 Senior Credit Facility, the 2018 Term Loan (defined below) and 2017 Term Loan (defined below) in accordance with the terms of the Credit Facility Amendments, and (ii) the borrower and Company comply with the other conditions to taking such actions, including maintaining a minimum of $150 million in liquidity.

Certain other typical limitations and conditions for credit facilities of this nature include, among other provisions, limitations on the use of revolving facility advances, certain restrictions on payments of dividends and establishment of a minimum liquidity requirement as indicated above. At March 31, 2021, we were in compliance with all financial covenants.

The 2018 ~~Unsecured~~Senior Credit Facility has an accordion feature which will allow the Company to increase the total commitments by an aggregate of up to $300.0 million. The $400 Million Revolver will mature on March 31, 2023 and can be extended to March 31, 2024 at the Company’s option, subject to certain conditions. The $200 Million Term Loan will mature on April 1, 2024.

Term Loans

2018 Term Loan

On February 15, 2018, our Operating Partnership, as borrower, the Company, as parent guarantor, and each party executing the term loan documentation as a subsidiary guarantor, entered into a new $225.0 million term loan (the “2018 Term Loan”) with KeyBank National Association, as administrative agent, and a syndicate of lenders listed in the loan documentation, which is fully drawn as of March 31, 2021. The ~~interest rate on~~2018 Term Loan has an accordion feature that allows us to increase the total commitments by $150.0 million prior to the maturity date of February 14, 2025, subject to certain conditions.

Amendments to $225.0 Million 2018 Term Loan

Between May 2020 and February 2021, the Company entered into several amendments to the First Amended and Restated Credit Agreement (the “2018 Term Loan Amendments”). As of March 31, 2021, the cumulative effect of the changes to the 2018 ~~Unsecured~~Term Loan effected by the 2018 Term Loan Amendments are substantially similar to the changes described above effected by the Credit Facility isAmendments.

We pay interest on advances at varying rates, based onupon, at our option, either (i) 1-, 2-, 3-, or 6-month LIBOR, plus a LIBOR margin between 1.35% and 1.95%, depending upon our leverage ratio (as defined in the loan documents). The pricing grid ~~ranging from 140 basis points to 215 basis points plus LIBOR for~~was modified under the ~~$400 Million Revolver and 135 basis points to 210 basis points plus LIBOR for the $200 Million~~2018 Term Loan ~~depending upon~~Amendments such that during the ~~Company's leverage ratio.~~Amendment Period the applicable margin will be set at Pricing Level VII, as defined in the 2018 Term Loan documents. We are required to pay other fees, including customary arrangement and administrative fees. The interest rate at March 31, ~~2020 for the $200 Million Term Loan~~2021 was ~~2.69%~~2.40%.

Financial and Other ~~Covenants.~~Covenants. We are required to comply with various financial and other covenants to draw and maintain borrowings under the 2018 ~~Unsecured~~Term Loan. The 2018 Term Loan Amendments provide that certain financial and other covenants under the 2018 Term Loan were waived or adjusted, which waivers and adjustments are the same as under the amendments to the Company’s 2018 Senior Credit Facility. At March 31, ~~2020,~~2021, we were in compliance with all financial covenants.

Unencumbered ~~Assets.~~ Assets. The 2018 Unsecured Credit Facility is unsecured. However, borrowings under the 2018 Unsecured Credit Facility are limited by the value of hotel assets that qualify as unencumbered assets. At March 31, 2020, the Company had 52 unencumbered hotel properties (the "Unencumbered Properties") supporting the 2018 Unsecured Credit Facility.

~~First Amendment to 2018 Unsecured Credit Facility~~

~~The First Amendment provides that certain financial and other covenants under the 2018 Unsecured Credit Facility were waived or adjusted, for the periods described below:~~

~~Waivers of all financial and certain other covenants in the 2018 Unsecured Credit Facility for the period April 1, 2020 through March 31, 2021; and~~

~~Adjustments to certain financial covenants for the period April 1, 2021 through December 31, 2021 including:~~


◦	~~Increases in the Maximum Leverage Ratio, adjusting down each quarter of 2021;~~


◦	~~Reduction of the Minimum Consolidated Fixed Charge Coverage Ratio;~~


◦	~~Increase of the Maximum Unsecured Leverage Ratio; and~~


◦	~~Reduction of the Minimum Unsecured Interest Coverage Ratio;~~

~~Increases to the Maximum Leverage Ratio for the calendar year 2022, adjusting down throughout 2022.~~

~~The interest rate during the periods of the financial and covenant waivers and adjustments will be set at Pricing Level VII, as defined in the 2018 Unsecured Credit Facility documents.~~

~~The First Amendment requires~~Term Loan Amendments require the borrower and certain subsidiaries to pledge to the secured parties all of the equity interests in the entities that own the Unencumbered Properties, as well as the equity interests in the TRS lessees related to such Unencumbered Properties until the borrower meets certain conditions for ~~their release.~~

~~The First Amendment confirmed~~the release of such pledges. During the period that the ~~borrower may advance up to an additional $100 million on~~pledges are in place, as well as at all other times during the $400 Million Revolver. Furthermore, the First Amendment permits the borrower to advance an additional $50 million, in addition to the $100 million advance described in the preceding sentence, upon filing mortgages and related security agreements on all Unencumbered Properties, with such security documents to be released upon the borrower meeting certain conditions for their release.

Certain other typical limitations and conditions for credit facilities of this nature were included among the provisions in the First Amendment including, among other provisions, limitations on the use of revolving facility advances, certain restrictions on payments of dividends and establishment of a minimum liquidity requirement.

~~Unsecured Term Loans~~

~~2018 Term Loan~~

On February 15, 2018, our Operating Partnership, as borrower, the Company, as parent guarantor, and each party executing the term loan documentation as a subsidiary guarantor, entered into a new $225.0 million unsecured term loan (the “2018 Term Loan”) with KeyBank National Association, as administrative agent, and a syndicate of lenders listed in the loan documentation, which is fully drawn as of March 31, 2020. The 2018 Term Loan has an accordion feature that allows us to increase the total commitments by $150.0 million prior to the maturity date of February 14, 2025, subject to certain conditions.

We pay interest on advances at varying rates, based upon, at our option, either (i) 1-, 2-, 3-, or 6-month LIBOR, plus a LIBOR margin between 1.80% and 2.55%, depending upon our leverage ratio (as defined in the loan documents), or (ii) the applicable base rate, which is the greatest of the administrative agent’s prime rate, the federal funds rate plus 0.50%, and 1-month LIBOR plus 1.00%, plus a base rate margin between 0.80% and 1.55%, depending upon our leverage ratio. We are required to pay other fees, including customary arrangement and administrative fees. The interest rate at March 31, 2020 was 2.49%.

On February 18, 2020, the Company repriced the 2018 Term Loan, lowering the interest rate to a LIBOR margin between 1.35% and 1.90%, depending on our leverage ratio. All other material provisions of the loan remain unchanged, including the maturity date of the loan which remains February 14, 2025. The Company expects to realize approximately $0.9 million of annual interest expense savings as a result of the transaction through the remaining term of the ~~loan.~~

~~Financial and Other Covenants. We are required to comply with various financial and other covenants to draw and maintain~~facility, borrowings under the 2018 Term ~~Loan. At March 31, 2020, we were in compliance with all financial covenants.~~

~~Unencumbered Assets. The 2018 Term~~ Loan ~~is unsecured. However, borrowings under the term loan~~ are limited by the value of the ~~assets that qualify as unencumbered assets. At March 31, 2020, the~~ Unencumbered ~~Properties also supported the 2018 Term Loan.~~Assets.

~~Third Amendment to 2018 Term Loan~~

On May 7, 2020, the Operating Partnership, as borrower, the Company, as parent guarantor, and each party executing the credit facility documentation as a subsidiary guarantor entered into the Third Amendment to the First Amended and Restated Credit Agreement (the “Third Amendment”) of the Operating Partnership’s 2018 Term Loan with KeyBank National Association, as administrative agent, and a syndicate of lenders. The changes to the 2018 Term Loan effected by the Third Amendment are substantially similar to the changes described above effected by the First Amendment to the Company’s 2018 Unsecured Credit Facility.

2017 Term Loan

On September 26, 2017, our Operating Partnership, as borrower, the Company, as parent guarantor, and each party executing the term loan documentation as a subsidiary guarantor, entered into a $225.0 million ~~unsecured~~ term loan (the "2017 Term Loan") with KeyBank National Association, as administrative agent, and a syndicate of lenders listed in the loan documentation.

Amendments to $225.0 Million 2017 Term Loan

Between May 2020 and February 2021, the Company entered into various amendments to the 2017 Term Loan (the “2017 Term Loan Amendments”). As of March 31, 2021, the cumulative effect of the changes to the 2017 Term Loan effected by the 2017 Term Loan Amendments are substantially similar to the changes described above effected by the Credit Facility Amendments.

The 2017 Term Loan has an accordion feature which allows us to increase the total commitments by an aggregate of $175.0 million prior to the maturity date, subject to certain conditions. The 2017 Term Loan matures on November 25, 2022.

We pay interest on advances at varying rates, based upon, at our option, either (i) 1-, 2-, 3-, or 6-month LIBOR, plus a LIBOR margin between 1.45% and ~~2.20%~~2.25%, depending upon our leverage ratio (as defined in the loan documents)~~, or (ii)~~. The pricing grid was modified under the 2017 Term Loan Amendments such that during the Amendment Period the applicable ~~base rate, which is~~margin will be set at Pricing Level VI, as defined in the greatest of the administrative agent’s prime rate, the federal funds rate plus 0.50%, and 1-month LIBOR plus 1.00%, plus a base rate margin between 0.45% and 1.20%, depending upon our leverage ratio.2017 Term Loan documents. We are required to pay other fees, including customary arrangement and administrative fees. The interest rate at March 31, 2021 was 2.70%.

Financial and Other Covenants. We are required to comply with a series of financial and other covenants to draw and maintain borrowings under the 2017 Term Loan. The 2017 Term Loan Amendments provide that certain financial and other covenants

under the 2017 Term Loan were waived or adjusted, which waivers and adjustments are the same as under the Credit Facility Amendments. At March 31, ~~2020,~~2021, we were in compliance with all financial covenants.

Unencumbered Assets. The 2017 Term Loan ~~is unsecured. However,~~Amendments require the borrower and certain subsidiaries to pledge to the secured parties all of the equity interests in the entities that own the Unencumbered Properties, as well as the equity interests in the TRS lessees related to such Unencumbered Properties until the borrower meets certain conditions for the release of such pledges. During the period that the pledges are in place, as well as at all other times during the term of the facility, borrowings under the ~~term loan~~2017 Term Loan are limited by the value of the ~~assets that qualify as unencumbered assets. At March 31, 2020, the~~ Unencumbered ~~Properties also supported the 2017 Term Loan.~~Assets.

~~We have drawn the entire $225.0 million available under the 2017 Term Loan. The interest rate at March 31, 2020 was 2.74%.~~

~~Second Amendment to 2017 Term Loan~~

On May 7, 2020, the Operating Partnership, as borrower, the Company, as parent guarantor, and each party executing the credit facility documentation as a subsidiary guarantor entered into the Second Amendment to the Credit Agreement (the “Second Amendment”) of the Operating Partnership’s 2017 Term Loan with KeyBank National Association, as administrative agent, and a syndicate of lenders. The changes to the 2017 Term Loan effected by the Second Amendment are substantially similar to the changes described above effected by the First Amendment to the Company’s 2018 Unsecured Credit Facility.

~~$200 Million~~Joint Venture Credit Facility

On October 8, 2019, Summit JV MR 1, LLC (the “Borrower”), as borrower, Summit Hospitality JV, LP (the “Parent”), as parent, and each party executing the credit facility documentation as a subsidiary guarantor, entered into a $200 million credit facility (the “Joint Venture Credit Facility”) with Bank of America, N.A., as administrative agent and sole initial lender, and BofA Securities, Inc., as sole lead arranger and sole bookrunner.

The Parent is the joint venture including the Operating Partnership and an affiliate of GIC, Singapore's sovereign wealth fund. See ""Note 8 -– Equity -– Non-controlling Interests in Joint ~~Venture"~~Venture" for additional information. The Operating Partnership and the Company are not borrowers or guarantors of the Joint Venture Credit Facility. The Joint Venture Credit Facility is guaranteed by all of the Borrower’s existing and future subsidiaries, subject to certain exceptions.

The Joint Venture Credit Facility is comprised of a $125 million revolving credit facility (the “$125 Million Revolver”) and a $75 million term loan (the “$75 Million Term Loan”). The Joint Venture Credit Facility has an accordion feature which will allow us to increase the total commitments by up to $300 million, for aggregate potential borrowings of up to $500 million on the Joint Venture Credit Facility.

The $125 Million Revolver and the $75 Million Term Loan will mature on October 8, 2023. Each ~~individually~~ can be extended for a single consecutive twelve-month period at the ~~Joint Venture's~~Borrower's option, subject to certain conditions.

Interest is paid on revolving credit advances at varying rates based upon, at the Borrower's option, either (i) 1-, 2-, 3-, or 6-month LIBOR, plus a margin of 2.15% for Eurodollar rate advances, or (ii) LIBOR, plus a margin of 2.15% for LIBOR floating rate advances, or (iii) the applicable base rate, which is the greatest of the administrative agent’s prime rate, the federal funds rate plus 0.50%, and 1-month LIBOR plus 1.00%, plus a base rate margin of 1.15%.advances. The applicable margin for a term loan advance shall be ~~five~~5 basis points less than revolving credit advances referenced above.

At March 31, 2021, we were in compliance with all financial covenants.

Amendments to $200 Million Joint Venture Credit Facility

On June 28, 2020, the Company entered into a Second Amendment to Credit Agreement concerning the Joint Venture Credit Facility (“Second Amendment”). The Second Amendment resulted in waivers or adjustments to certain financial and other covenants under the Joint Venture Credit Facility, which are described in the Current Report on Form 8-K filed by the Company on June 24, 2020.

On April 29, 2021, the Borrower, Parent, and each party executing the credit facility documentation as a subsidiary guarantor, entered into a Third Amendment to Credit Agreement concerning the Joint Venture Credit Facility (the “Joint Venture Amendment”) with Bank of America, N.A., as administrative agent, and Bank of America, N.A., KeyBank National Association and Bank of Montreal, Chicago Branch, as lenders.

Certain financial and other covenants under the Joint Venture Credit Facility were waived or adjusted, for the periods described below:

•The Maximum Leverage Ratio and borrowing base leverage ratio (for purposes of determining availability) shall not exceed the following:

◦55.0% through the fourth quarter of 2021

◦65.0% for the first and second quarters of 2022

◦60.0% for the third quarter of 2022 until the initial maturity date

◦55.0% during any extension period

•Temporary waiver of the Minimum Consolidated Fixed Charge Coverage Ratio through the fourth quarter of 2021 and adjusting up through the second quarter of 2022; and

•Temporary waiver of the Borrowing Base Coverage Ratio through the first quarter of 2022 and adjusting up through June 30, 2023.

During the covenant waiver period, the applicable margin shall be increased to 230 basis points and 225 basis points for the revolver and term loan, respectively. After the covenant waiver period, the applicable margin will revert to 215 basis points and 210 basis points for the revolver and term loan, respectively.

The Joint Venture Amendment confirmed that the Borrower may make additional advances on the existing revolving facility, subject to certain financial covenant limitations. Certain other typical limitations and conditions for credit facilities of this nature were included among the provisions in the amendments including, among other provisions, limitations on the use of revolving facility advances, certain restrictions on payments of dividends and limitations on investments and dispositions. We retain the right to opt out of certain additional restrictive covenants upon demonstration of compliance with the required financial covenants.

Borrowing Base ~~Assets.~~ Assets. The Joint Venture Credit Facility is secured primarily by a first priority pledge of the Borrower's equity interests in the subsidiaries that hold the borrowing base assets, and the related TRS entities, which wholly own the TRS Lessees that lease each of the borrowing base assets.

Convertible Senior Notes and Capped Call Options

~~Financial~~

On January 7, 2021, we entered into an underwriting agreement (the “Convertible Notes Offering”) pursuant to which the Company agreed to offer and ~~Other Covenants.~~ sell $287.5 million aggregate principal amount of the Company’s 1.50% convertible senior notes due 2026 (the “Convertible Notes"). The net proceeds from the Convertible Notes Offering, after deducting underwriting discounts and commissions and estimated offering expenses payable by the Company (including net proceeds from the full exercise by the underwriters of their over-allotment option to purchase additional Convertible Notes), were approximately $280.0 million before consideration of the Capped Call Transactions (as defined below). These proceeds were used to pay the cost of the Capped Call Transactions and to partially repay outstanding obligations under the 2018 Senior Credit Facility and 2017 Term Loan.

The Convertible Notes bear interest at a rate of 1.50% per year, payable semi-annually in arrears on February 15 and August 15 of each year, beginning on August 15, 2021. The Convertible Notes will mature on February 15, 2026 (the “Maturity Date”), unless earlier converted, purchased or redeemed. Prior to August 15, 2025, the Convertible Notes will be convertible only upon certain circumstances and during certain periods. On or after August 15, 2025 and through the Maturity Date, holders may convert any of their Convertible Notes into shares of the Company’s common stock, at the applicable conversion rate at any time prior to the close of business on the second scheduled trading day prior to the Maturity Date, unless the Convertible Notes have been previously purchased or redeemed by the Company. During the three months ended March 31, 2021, the Company recorded coupon interest expense of $0.9 million and amortized $0.4 million of the $7.5 million debt issuance costs related to the Convertible Notes Offering. Including the amortization of the debt issuance costs, the current effective interest rate on the Convertible Notes is approximately 2.00%.

The initial conversion rate of the Convertible Notes is 83.4028 shares of common stock per $1,000 principal amount of Convertible Notes, which is equivalent to an initial conversion price of $11.99 per share of common stock based on the 37.5% base conversion premium on the reference price of $8.72 per share. In ~~addition,~~no event will the ~~Borrower is~~conversion rate exceed 114.6788 shares of common stock per $1,000 principal amount of Convertible Notes, subject to certain adjustments defined in the Convertible Notes Offering.

On January 7, 2021, in connection with the pricing of the Convertible Notes, and on January 8, 2021, in connection with the full exercise by the Underwriters of their option to purchase additional Convertible Notes pursuant to the Underwriting Agreement, the Company entered into privately negotiated capped call transactions (the “Capped Call Transactions”) with certain of the underwriters or their respective affiliates and another financial institution (the “Capped Call Counterparties”). The Capped Call Transactions initially cover, subject to anti-dilution adjustments substantially similar to those applicable to the Convertible Notes, the number of shares of common stock underlying the Convertible Notes. The Capped Call Transactions are generally expected to reduce the potential dilution to holders of shares of common stock upon conversion of the Convertible Notes or offset the potential cash payments that the Company could be required to ~~comply~~make in excess of the principal amount of any converted Convertible Notes upon conversion thereof, with such reduction or offset subject to a ~~series~~cap.

The effective strike price of ~~financial~~the Capped Call Transactions is initially $15.26, which represents a premium of 75.0% over the last reported sale price of the common stock on the New York Stock Exchange on January 7, 2021, and ~~other covenants in order~~is subject to ~~borrow~~certain adjustments under the ~~Joint Venture Credit Facility. At March 31, 2020, we were in compliance with all financial covenants.~~terms of the Capped Call transactions.

~~Metabank~~MetaBank Loan

On June 30, 2017, we entered into a $47.6 million secured, non-recourse loan with MetaBank (the "MetaBank Loan"). ~~During the year ended December 31, 2017, we drew $47.6 million on the MetaBank Loan and used the proceeds to pay down the principal balance of our former $300 million revolving credit facility.~~ The MetaBank Loan provides for a fixed interest rate of 4.44% and originally provided for ~~interest-only~~interest only payments for 18 months following the closing date. On January 31, 2019, we entered into a modification agreement, at no additional cost, that increased the interest-only period from 18 months to 24 months following the closing date. Beginning August 1, 2019, the loan amortizes over 25 years through the maturity date of July 1, 2027. The MetaBank Loan is secured by 3 hotels and is subject to a prepayment penalty if prepaid prior to April 1, 2027. On May 1, 2020, MetaBank waived the annual minimum debt service covenant ratio for the year ended December 31, 2020, and on April 12, 2021, MetaBank extended such waiver for the year ended December 31, 2021. The next covenant measurement date is December 31, 2022.

Mortgage Loans

At March 31, ~~2020,~~2021, we had mortgage loans totaling ~~$156.8~~$153.0 million that are secured primarily by first mortgage liens on 15

hotel properties.

On March 19, 2019, we had a mortgage loan of $26.2 million that was secured by 4 hotel properties. We defeased $6.3 million of the principal to have the encumbrance released on one hotel property, the Hyatt Place in Arlington, TX, to facilitate the sale of the hotel property. As a result of this transaction, we recorded debt transaction costs of $0.6 million primarily related to the debt defeasance premium. The mortgage loan remains outstanding and is secured by the remaining 3 hotel properties.

NOTE 6 - LEASES

The Company has operating leases related to the land under certain hotel properties, conference centers, parking spaces, automobiles, our corporate office and other miscellaneous office equipment. These leases have remaining terms of 1 year to 7877 years, some of which include options to extend the leases for additional years. The exercise of lease renewal options is at our sole discretion. Certain leases also include options to purchase the leased property. Leases with an initial term of 12 months or less are not recorded on the balance sheet; we recognize lease expense for these leases on a straight-line basis over the lease term.

Certain of our lease agreements include rental payments based on a percentage of revenue over contractual levels and others include rental payments adjusted periodically for inflation. Our lease agreements do not contain any material residual value guarantees or restrictive covenants that materially affect our business. In addition, we rent or sublease certain owned real estate to third parties. InWe recorded gross third-party tenant income of $0.6 million and $0.5 million during the three months ended March 31, ~~2020~~2021 and ~~2019, we recorded gross third-party tenant income of $0.5 million and $0.5 million,~~2020, respectively, which were recorded in Other income in the Condensed Consolidated Statement of Operations.

The majority of our third-party tenants requested rent deferrals to ease the negative financial effects of the COVID-19 pandemic on their businesses. We have generally negotiated with these tenants and granted rent deferrals that defer rent for a specified number of months and require repayment of the deferred rent over a negotiated period of time.

On January 1, 2019, the Company adopted ASC No. 842, Leases, and recognized right-of-use lease assets and related liabilities. The right-of-use assets and related liabilities include renewal options reasonably certain to be exercised. We base our lease calculations on our estimated incremental borrowing rate. As of March 31, ~~2020,~~2021, our weighted average incremental borrowing rate was ~~4.9%~~4.91%.

During the three months ended March 31, ~~2020~~2021 and ~~2019,~~2020, the Company's total operating lease cost was ~~$0.9~~$0.8 million and ~~$1.0~~$0.9 million, respectively, and the operating cash outflows from operating leases was ~~$0.8~~$0.7 million and ~~$0.9~~$0.8 million, respectively. As of March 31, ~~2020,~~2021, the weighted average operating lease term was ~~28.3~~28.2 years.

On January 31, 2019, we exercised our option pursuant to a ground lease agreement to purchase the land upon which our hotel property in Baltimore (Hunt Valley), MD is located for $4.2 million, which resulted in a termination of obligations under the ground lease.

Operating lease maturities as of March 31, ~~2020~~2021 are as follows (in thousands):


2021	$	1,536
2022	1,842
2023	970
2024	910
2025	913
Thereafter	27,993
Total lease payments (1)	34,164
Less interest	(16,041)
Total	$	18,123

(1)Certain payments above include future increases to the minimum fixed rent based on the Consumer Price Index in effect at the initial measurement of the lease balances.

Hotel Property Portfolio Activity

We continuously consider ways in which to refine our portfolio ~~of properties~~ to drive growth and create value. In the normal course of business, we evaluate opportunities to acquire additional properties that meet our investment criteria and opportunities to recycle capital through the disposition of properties. As such, the composition and size of our portfolio of properties may change materially over time. Significant changes to our portfolio of properties ~~would~~could have a material effect on our Condensed Consolidated Financial Statements.

See “Note 3 - Investment in Hotel Properties, net” to the Condensed Consolidated Financial Statements for additional information concerning our asset acquisitions, development, and dispositions.

Results of Operations

The comparisons that follow should be reviewed in conjunction with the unaudited interim Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report on Form 10-Q.

Comparison of the Three Months Ended March 31, ~~2020~~2021 with the Three Months Ended March 31, ~~2019~~2020

The following table contains key operating metrics for our total portfolio ~~and our same-store portfolio~~ for the three months ended March 31, ~~2020~~2021 compared with the three months ended March 31, ~~2019~~2020 (dollars in thousands, except ADR and RevPAR). ~~We define same-store hotels as properties that we owned as of March 31, 2020 and that we have owned or leased at all times since January 1, 2019.~~


	For the Three Months Ended March 31,				Quarter-over-Quarter				Quarter-over-Quarter
	2021			2020				Dollar Change		Percentage Change
	Total Portfolio (72 hotels)				Total Portfolio (72 hotels)						Total Portfolio (72 hotels)		Total Portfolio (72 hotels)
Revenues:
Room	$	53,245			$	98,603					$	(45,358)	(46.0)	%
Food and beverage	1,003				4,884						(3,881)		(79.5)	%
Other	3,606				4,898						(1,292)		(26.4)	%
Total	$	57,854			$	108,385					$	(50,531)	(46.6)	%

Expenses:
Room	$	12,550			$	24,573					$	(12,023)	(48.9)	%
Food and beverage	556				4,037						(3,481)		(86.2)	%
Other hotel operating expenses	24,574				35,283						(10,709)		(30.4)	%
Total	$	37,680			$	63,893					$	(26,213)	(41.0)	%

Operational Statistics:
Occupancy	50.3		%		61.4		%				n/a		(18.0)	%
ADR	$	104.12			$	156.44					$	(52.32)	(33.4)	%
RevPAR	$	52.41			$	95.99					$	(43.58)	(45.4)	%

For the Three Months Ended March 31, Quarter-over-Quarter Quarter-over-Quarter
2020 2019 Dollar Change Percentage/Basis Point Change

Total
Portfolio
(72 hotels)

Same-Store
Portfolio
(67 hotels)

Total
Portfolio
(75 hotels)

Same-Store
Portfolio
(67 hotels)

Total
Portfolio
(72/75 hotels)

Same-Store
Portfolio
(67 hotels)

Total
Portfolio
(72/75 hotels)

Same-Store
Portfolio
(67 hotels)

Revenues:
Room $ 98,603
$ 90,735
$ 128,100
$ 118,975
$ (29,497 ) $ (28,240 ) (23.0 )% (23.7 )%
Food and beverage 4,884
4,582
6,020
5,783
(1,136 ) (1,201 ) (18.9 )% (20.8 )%
Other 4,898
4,531
4,832
4,655
66
(124 ) 1.4 % (2.7 )%
Total $ 108,385
$ 99,848
$ 138,952
$ 129,413
$ (30,567 ) $ (29,565 ) (22.0 )% (22.8 )%

Expenses:
Room $ 24,573
$ 22,835
$ 27,840
$ 25,333
$ (3,267 ) $ (2,498 ) (11.7 )% (9.9 )%
Food and beverage 4,037
3,712
4,538
4,295
(501 ) (583 ) (11.0 )% (13.6 )%
Other hotel operating expenses 35,283
32,679
39,859
36,531
(4,576 ) (3,852 ) (11.5 )% (10.5 )%
Total $ 63,893
$ 59,226
$ 72,237
$ 66,159
$ (8,344 ) $ (6,933 ) (11.6 )% (10.5 )%

Operational Statistics:
Occupancy 61.4 % 61.3 % 76.4 % 76.5 % n/a
n/a
(1,502 ) bps (1,520 ) bps
ADR $ 156.44
$ 155.05
$ 160.80
$ 164.74
$ (4.36 ) $ (9.69 ) (2.7 )% (5.9 )%
RevPAR $ 95.99
$ 95.05
$ 122.81
$ 126.03
$ (26.82 ) $ (30.98 ) (21.8 )% (24.6 )%

Changes from the three months ended March 31, ~~2020~~2021 compared with the three months ended March 31, ~~2019~~2020 were due to the following:

•

•Revenues. The decline in revenues was primarily due to a significant decline in occupancy as a result of the COVID-19 pandemic. See "Industry Trends and Outlook - Effects of COVID-19 Pandemic on Our Business" for further information.

•RevPAR. The declines in RevPAR were primarily due to a significant decline in occupancy as a result of the COVID-19 pandemic. See "Industry Trends and Outlook - Effects of COVID-19 Pandemic on Our Business" for further information.

•Expenses. We have taken comprehensive cost reduction initiatives, including the reduction of labor and temporary elimination of certain services and amenities, at all hotels which led to the significant decline in operating expenses.

. The decline in total revenues was primarily related to the same-store portfolio as incremental revenues from acquired properties were offset by declines related to disposed properties. The decline in same-store revenues was primarily due to a significant decline in occupancy in the last few weeks of the quarter ended March 31, 2020 as a result of the COVID-19 pandemic. See ~~"Industry Trends and Outlook - Effects of COVID-19 Pandemic on Our Business"~~ ~~for further information.~~


•	~~RevPAR. The declines in RevPAR were primarily due to a significant decline in occupancy in the last few weeks of the quarter ended March 31, 2020 as a result of the COVID-19 pandemic. See~~ ~~"Industry Trends and Outlook - Effects of COVID-19 Pandemic on Our Business"~~ ~~for further information.~~


•	~~Expenses~~. We have taken comprehensive cost reduction initiatives, including the reduction of labor and temporary elimination of certain services and amenities, at all hotels which led to the decline in operating expenses.

The following table includes other consolidated income and expenses for the three months ended March 31, ~~2020~~2021 compared with the three months ended March 31, ~~2019~~2020 (dollars in thousands).


	For the Three Months Ended March 31,
	2021		2020		Dollar Change		Percentage Change
Property taxes, insurance and other	$	10,904	$	11,698	$	(794)	(6.8)	%
Management fees	1,555		3,072		(1,517)		(49.4)	%
Depreciation and amortization	27,297		27,079		218		0.8	%
Corporate general and administrative	5,678		4,668		1,010		21.6	%
Provision for credit losses	—		2,530		(2,530)		(100.0)	%
Loss on impairment and write-off of assets	—		782		(782)		(100.0)	%
Gain (loss) on disposal of assets, net	50		(3)		53		1,766.7	%
Interest expense	10,788		11,012		(224)		(2.0)	%
Other income, net	3,232		2,106		1,126		53.5	%
Income tax expense	105		1,968		(1,863)		(94.7)	%

For the Three Months Ended
March 31,
2020 2019 Dollar Change Percentage Change
Property taxes, insurance and other $ 11,698
$ 11,408
$ 290
2.5 %
Management fees 3,072
5,146
(2,074 ) (40.3 )%
Depreciation and amortization 27,079
25,536
1,543
6.0 %
Corporate general and administrative 4,668
5,990
(1,322 ) (22.1 )%
Provision for credit losses 2,530
—
2,530
100.0 %
Loss on impairment of assets 782
—
782
100.0 %
(Loss) gain on disposal of assets, net (3 ) 4,166
(4,169 ) (100.1 )%
Interest expense 11,012
10,852
160
1.5 %
Other income, net 2,106
1,301
805
61.9 %
Income tax expense 1,968
350
1,618
462.3 %

Changes from the three months ended March 31, ~~2020~~2021 compared with the three months ended March 31, ~~2019~~2020 were due to the following:

•

~~Property Taxes, Insurance and Other. This increase is primarily due to increased insurance premiums related to our casualty and general liability policies.~~

•Property Taxes, Insurance and Other. This decrease is primarily due to a reduction in property taxes related to certain properties as a result of the effects of the COVID-19 pandemic on 2021 property tax valuations.

•Management Fees. This decrease is primarily due to reduced consolidated revenues, upon which management fees are based, as a result of the COVID-19 pandemic.

•Depreciation and Amortization. This increase is due to incremental depreciation expense as a result of renovation completions and capital expenditures.

•Corporate General and Administrative. This increase is primarily due to incentive and other compensation costs.

•Gain (Loss) on Disposal of Assets. The gain on disposal of assets, net for the three months ended March 31, 2021 is due to the receipt of a legal settlement related to properties sold in a prior period.

•Interest Expense. Interest expense decreased as a result of a reduction in our weighted average interest rate, primarily due to the Convertible Notes Offering.

•Other Income, net. This increase is primarily due to the interest income recorded on our mezzanine loans as a result of the interest payments made in connection with the loan amendments completed during the three months ended March 31, 2021. See "Note 4 - Investment in Real Estate Loans" to the Condensed Consolidated Financial Statements for further information.

•Income Tax Expense. The Company recorded a $0.1 million income tax expense during the three months ended March 31, 2021 primarily attributable to current federal and state income taxes of our TRSs. The $2.0 million income tax expense recorded in the three months ended March 31, 2020 included a $2.1 million discrete non-cash deferred income tax related to the establishment of valuation allowances against our TRS Lessees' deferred tax assets.


•	~~Management Fees. This decrease is primarily due to reduced consolidated revenues, upon which management fees are based, as a result of the COVID-19 pandemic.~~


•	~~Depreciation and Amortization~~. This increase is due to incremental depreciation associated with the hotels acquired in 2019 of $3.1 million and an increase in depreciation expense of $0.3 million for the same-store portfolio, partially offset by a decrease in depreciation expense of $1.9 million related to the hotel properties sold after December 31, 2018.


•	~~Corporate General and Administrative. This decline is primarily due to decreases in incentive compensation costs as a result of our comprehensive cost reduction initiatives in response to the COVID-19 pandemic.~~

•

~~Provision for Credit Losses~~. We evaluated our notes receivable for potential credit losses by estimating the fair value of the collateral supporting each note receivable at March 31, 2020 based on assumptions related to the expected future performance of the collateral assets and the resulting anticipated net selling value of the assets at capitalization rates that are common for the asset class. During the three months ended March 31, 2020, we recorded a Provision for credit losses of $2.5 million due to the effects of the COVID-19 pandemic.

•

~~Loss on Impairment of Assets.~~ Due to the adverse effects of the COVID-19 pandemic, we evaluated our purchase options for impairment at March 31, 2020. On the basis of our impairment evaluation, we recorded a Loss on impairment of assets of $0.8 million related to one of our purchase options. See ~~"Note 9 - Fair Value Measurement"~~ ~~to the Condensed Consolidated Financial Statements for further information.~~


•	~~(Loss) gain on Disposal of Assets.~~ ~~This decrease is primarily due to the sale of two hotels in the three months ended March 31, 2019 for a net gain of $4.2 million.~~


•	~~Interest Expense. Interest expense increased slightly as a result of increased borrowings, offset by declines in base interest rates.~~


•	~~Other Income~~. This increase is primarily due to a decline in debt transaction costs of $0.7 million and an increase in interest income of $0.4 million as a result of an increase in the balance of real estate loans, partially offset by net casualty recoveries of $0.4 million during the three months ended March 31, 2019.


•	~~Income Tax Expense. The $2.0 million income tax expense includes a $2.1 million discrete non-cash deferred income tax related to the establishment of valuation allowances against our TRS Lessees’ deferred tax assets.~~

Non-GAAP Financial Measures

We disclose certain “non-GAAP financial measures,” which are measures of our historical financial performance. Non-GAAP financial measures are financial measures not prescribed by Generally Accepted Accounting Principles ("GAAP"). These measures are as follows: (i) Funds From Operations (“FFO”) and Adjusted Funds from Operations ("AFFO"), (ii) Earnings before Interest, Taxes, Depreciation and Amortization ("EBITDA"), Earnings before Interest, Taxes, Depreciation and Amortization for Real Estate ("EBITDAre") and Adjusted EBITDAre (as described below). We caution investors that amounts presented in accordance with our definitions of non-GAAP financial measures may not be comparable to similar measures disclosed by other companies, since not all companies calculate these non-GAAP financial measures in the same manner. Our non-GAAP financial measures should be considered along with, but not as alternatives to, net income (loss) as a measure of our operating performance. Our non-GAAP financial measures may include funds that may not be available for our discretionary use due to functional requirements to conserve funds for capital expenditures, property acquisitions, debt service obligations and other commitments and uncertainties. Although we believe that our non-GAAP financial measures can enhance the understanding of our financial condition and results of operations, these non-GAAP financial measures are not necessarily better indicators of any trend as compared to a comparable measure prescribed by GAAP such as net income (loss).

FFO and AFFO

As defined by Nareit, FFO represents net income or loss (computed in accordance with GAAP), excluding preferred dividends, gains (or losses) from sales of real property, impairment losses on real estate assets, items classified by GAAP as extraordinary, the cumulative effect of changes in accounting principles, plus depreciation and amortization related to real estate assets, and adjustments for unconsolidated partnerships, and joint ventures. AFFO represents FFO excluding amortization of deferred financing costs, franchise fees, equity-based compensation expense, debt transaction costs, premiums on redemption of preferred shares, losses from net casualties, non-cash lease expense, non-cash interest income and non-cash income tax related adjustments to our deferred tax assets. Unless otherwise indicated, we present FFO and AFFO applicable to our common shares and common units. We present FFO and AFFO because we consider FFO and AFFO important supplemental measures of our operational performance and believe they are frequently used by securities analysts, investors and other interested parties in the evaluation of REITs, many of which present FFO and AFFO when reporting their results. FFO and AFFO are intended to exclude GAAP historical cost depreciation and amortization, which assumes that the value of real estate assets diminishes ratably over time. Historically, however, real estate values have risen or fallen with market conditions. Because FFO and AFFO exclude depreciation and amortization related to real estate assets, gains and losses from real property dispositions and impairment losses on real estate assets, FFO and AFFO provide performance measures that, when compared year over year, reflect the effect to operations from trends in occupancy, guestroom rates, operating costs, development activities and interest costs, providing perspective not immediately apparent from net income. Our computation of FFO differs slightly from the computation of Nareit-defined FFO related to the reporting of corporate depreciation and amortization ~~expense.~~expense, and adjustments related to provision for credit losses. Our computation of FFO may also differ from the methodology for calculating FFO used by other equity REITs and, accordingly, may not be comparable to such other REITs. FFO and AFFO should not be considered as alternatives to net income (loss) (computed in accordance with GAAP) as an indicator of our liquidity, nor are they indicative of funds available to fund our cash needs, including our ability to pay dividends or make distributions. Where indicated in this

Quarterly Report on Form 10-Q, FFO is based on our computation of FFO and not the computation of Nareit-defined FFO unless otherwise noted.

The following is a reconciliation of our GAAP net ~~income~~loss to FFO and AFFO for the three months ended March 31, ~~2020~~2021 and ~~2019~~2020 (in thousands, except per share/unit amounts):


	For the Three Months Ended March 31,
	2021		2020
Net loss	$	(32,871)	$	(16,214)
Preferred dividends	(3,709)		(3,709)

Loss related to non-controlling interests in joint venture	1,452		855
Net loss applicable to common shares and common units	(35,128)		(19,068)
Real estate-related depreciation	27,180		26,964
Loss on impairment and write-off of assets	—		782
(Gain) loss on disposal of assets, net	(50)		3
Provision for credit losses	—		2,530
Adjustments related to non-controlling interests in consolidated joint venture	(1,510)		(1,413)
FFO applicable to common shares and common units	(9,508)		9,798
Amortization of lease-related intangible assets, net	22		22
Amortization of deferred financing costs	1,011		457
Amortization of franchise fees	117		115
Equity-based compensation	1,569		1,475

Debt transaction costs	116		1

Non-cash interest income	(257)		(791)
Non-cash lease expense, net	120		109
Casualty (recoveries) losses, net	(35)		89
Increase in deferred tax asset valuation allowance	—		2,058
Adjustments related to non-controlling interests in consolidated joint venture	(78)		(64)

AFFO applicable to common shares and common units	$	(6,923)	$	13,269
Weighted average diluted common shares/common units (1)	104,440		104,298
FFO per common share/common unit	$	(0.09)	$	0.09
AFFO per common share/common unit	$	(0.07)	$	0.13

For the
Three Months Ended
March 31,
2020 2019
Net (loss) income $ (16,214 ) $ 12,900
Preferred dividends (3,709 ) (3,709 )
Loss related to non-controlling interests in joint venture 855
—
Net (loss) income applicable to common shares and common units (19,068 ) 9,191
Real estate-related depreciation 26,964
25,425
Loss on impairment of assets 782
—
Loss (gain) on disposal of assets, net 3
(4,166 )
Provision for credit losses 2,530
—
Adjustments related to non-controlling interests in consolidated joint venture (1,413 ) —
FFO applicable to common shares and common units 9,798
30,450
Amortization of lease-related intangible assets, net 22
35
Amortization of deferred financing costs 457
381
Amortization of franchise fees 115
111
Equity-based compensation 1,475
1,352
Debt transaction costs 1
713
Non-cash interest income (791 ) (507 )
Non-cash lease expense, net 109
156
Casualty losses (recoveries), net 89
(427 )
Increase in deferred tax asset valuation allowance 2,058
—
Adjustments related to non-controlling interests in consolidated joint venture (64 ) —
AFFO applicable to common shares and common units $ 13,269
$ 32,264
Weighted average diluted common shares/common units ⁽¹⁾
104,298
104,198
FFO per common share/common unit $ 0.09
$ 0.29
AFFO per common share/common unit $ 0.13
$ 0.31
(1)Includes common units in the Operating Partnership held by limited partners (other than us and our subsidiaries) because the common units are redeemable for cash or, at our election, shares of our common stock.


~~(1)~~	Includes common units in the Operating Partnership held by limited partners (other than us and our subsidiaries) because the common units are redeemable for cash or, at our election, shares of our common stock.

AFFO applicable to common shares and common units decreased ~~$19.0~~$20.2 million, or ~~58.9%~~152.2%, for the three months ended March 31, ~~2020~~2021 compared to the same period of ~~2019~~2020 due to a significant decline in ~~occupancy in the last few weeks of the quarter ended March 31, 2020~~revenue as a result of the COVID-19 pandemic. See "Industry Trends and Outlook - Effects of COVID-19 Pandemic on Our Business" for further information.

EBITDA, EBITDAre and Adjusted EBITDAre

EBITDA

EBITDA represents net income or loss, excluding: (i) interest, (ii) income tax expense and (iii) depreciation and amortization. We believe EBITDA is useful to an investor in evaluating our operating performance because it provides investors with an indication of our ability to incur and service debt, to satisfy general operating expenses, to make capital expenditures and to fund other cash needs or reinvest cash into our business. We also believe it helps investors meaningfully evaluate and compare the results of our operations from period to period by removing the effect of our asset base (primarily depreciation and amortization) from our operating results. Our management team also uses EBITDA as one measure in determining the value of acquisitions and dispositions.

EBITDAre and Adjusted EBITDAre

EBITDAre is based on EBITDA and is expected to provide additional relevant information about REITs as real estate companies in support of growing interest among generalist investors. EBITDAre is intended to be a supplemental non-GAAP performance measure that is independent of a company’s capital structure and will provide a uniform basis to measure the enterprise value of a company compared to other REITs.

EBITDAre, as defined by Nareit, is calculated as EBITDA, excluding: (i) loss and gains on disposition of property and (ii) asset impairments, if any. We believe EBITDAre is useful to an investor in evaluating our operating performance because it provides investors with an indication of our ability to incur and service debt, to satisfy general operating expenses, to make capital expenditures and to fund other cash needs or reinvest cash into our business. We also believe it helps investors meaningfully evaluate and compare the results of our operations from period to period by removing the effect of our asset base (primarily depreciation and amortization) from our operating results.

We make additional adjustments to EBITDAre when evaluating our performance, such as adjustments related to the provision for credit losses, because we believe that the exclusion of certain additional non-recurring or certain non-cash items described below provides useful supplemental information to investors regarding our ongoing operating performance. We believe that the presentation of Adjusted EBITDAre, when combined with the primary GAAP presentation of net income, is useful to an investor in evaluating our operating performance because it provides investors with an indication of our ability to incur and service debt, to satisfy general operating expenses, to make capital expenditures and to fund other cash needs or reinvest cash into our business. We also believe it helps investors meaningfully evaluate and compare the results of our operations from period to period by removing the effect of our asset base (primarily depreciation and amortization) from our operating results.

The following is a reconciliation of our GAAP net ~~income~~loss to EBITDA, EBITDAre and Adjusted EBITDAre for the three months ended March 31, ~~2020~~2021 and ~~2019~~2020 (in thousands):


	For the Three Months Ended March 31,
	2021		2020
Net loss	$	(32,871)	$	(16,214)
Depreciation and amortization	27,297		27,079
Interest expense	10,788		11,012
Interest income	(1)		(56)
Income tax expense	105		1,968
EBITDA	5,318		23,789
Loss on impairment and write-off of assets	—		782
Provision for credit losses	—		2,530
(Gain) loss on disposal of assets, net	(50)		3
EBITDAre	5,268		27,104
Amortization of lease-related intangible assets, net	22		22
Equity-based compensation	1,569		1,475

Debt transaction costs	116		1
Non-cash interest income	(257)		(791)
Non-cash lease expense, net	120		109
Casualty (recoveries) losses, net	(35)		89
Loss related to non-controlling interests in joint venture	1,452		855
Adjustments related to non-controlling interests in consolidated joint venture	(2,031)		(2,114)

Adjusted EBITDAre	$	6,224	$	26,750

For the
Three Months Ended
March 31,
2020 2019
Net (loss) income $ (16,214 ) $ 12,900
Depreciation and amortization 27,079
25,536
Interest expense 11,012
10,852
Interest income (56 ) (69 )
Income tax expense 1,968
350
EBITDA 23,789
49,569
Loss on impairment of assets 782
—
Provision for credit losses 2,530
—
Loss (gain) on disposal of assets, net 3
(4,166 )
EBITDAre
27,104
45,403
Amortization of lease-related intangible assets, net 22
35
Equity-based compensation 1,475
1,352
Debt transaction costs 1
713
Non-cash interest income (791 ) (507 )
Non-cash lease expense, net 109
156
Casualty losses (recoveries), net 89
(427 )
Loss related to non-controlling interests in joint venture 855
—
Adjustments related to non-controlling interests in consolidated joint venture (2,114 ) —
Adjusted EBITDAre
$ 26,750
$ 46,725

Adjusted EBITDAre decreased ~~$20.0~~$20.5 million, or ~~42.8%~~76.7%, for the three months ended March 31, ~~2020~~2021 compared to the same period of ~~2019~~2020 due to a significant decline in ~~occupancy in the last few weeks of the quarter ended March 31, 2020~~revenue as a result of the COVID-19 pandemic. See "Industry Trends and Outlook - Effects of COVID-19 Pandemic on Our Business" for further information.

Liquidity and Capital Resources

The effects of the COVID-19 pandemic have adversely affected our financial position and cash flows from operations. During the three months ended March 31, 2020, we borrowed a net amount of $100.0 million on our $400 million unsecured revolving credit facility (the "$400 Million Revolver”) and an additional $25.0 million on April 1, 2020 as a precautionary measure. Additionally, subsequent to March 31, 2020 we amended our loan agreements to provide additional borrowing capacity of $150.0 million. The COVID-19 pandemic has also significantly increased economic uncertainty and has led to disruption and volatility in the global capital markets, which could increase the cost of and limit accessibility to capital. As such, our ability to raise capital through public or private offerings of our equity securities may be limited until ~~an economic recovery commences and~~ capital markets ~~resume operating at~~recover toward pre-pandemic levels. In addition, we have entered into modifications of our 2018 Senior Credit Facility, which restricts our ability to use advances on the $400 Million Revolver for certain purposes, however, we continue to be able to access the $400 Million Revolver to fund operations, in addition to other items. Additionally, certain factors may have an adverse effect on our ability to access capital sources, including our financial performance, degree of leverage, the value of our unencumbered hotel properties, borrowing restrictions imposed by lenders, volatility in the equity and debt capital markets and other market conditions. Financing may not be available to us, or on terms that are attractive to us.

Our short-term liquidity requirements consist primarily of operating expenses and other expenditures directly associated with our hotel properties, recurring maintenance and capital expenditures necessary to maintain our hotel properties in accordance with internal and brand standards, capital expenditures to ~~maintain~~improve our hotel properties, hotel development costs, acquisitions, interest payments, settlement of interest rate swaps, scheduled principal payments on outstanding indebtedness, restricted cash funding obligations, mezzanine loan funding commitments, joint venture acquisitions and capital requirements, corporate overhead, and distributions to our stockholders when declared. Our long-term liquidity requirements consist primarily of the costs of acquiring additional hotel properties, renovations and other non-recurring capital expenditures that periodically are made with respect to our hotel properties, dividend distributions, and scheduled debt payments, including maturing loans.

To satisfy the requirements for qualification as a REIT, we must meet a number of organizational and operational requirements, including a requirement that we distribute annually at least 90% of our REIT taxable income to our stockholders, determined without regard to the deduction for dividends paid and excluding any net capital gains. We intend to distribute a sufficient amount of our taxable income to maintain our status as a REIT and to avoid tax on undistributed income. Because we anticipate distributing a substantial amount of our available cash from operations, if sufficient funds are not available to us from hotel dispositions, our senior revolving credit and term loan facilities and other loans, we may need to raise additional capital to grow our business.

We currently have ~~provided~~outstanding mezzanine loans on ~~four~~three real estate development projects to fund up to an aggregate of ~~$58.4~~$54.6 million for the development of four hotel properties. ~~Three~~Two of the real estate development loans, which closed in the fourth quarter of 2017, are fully funded. ~~Each has~~Both have a stated interest rate of ~~8.0%~~8.00% and ~~an initial term of approximately three years.~~mature on March 31, 2022. One of the real estate development loans, which closed in the third quarter of 2019, has ~~$9.5~~$20.3 million funded as of March 31, ~~2020,~~2021, has $8.5 million remaining to be funded, and has a stated interest rate of ~~9.0%~~9.00% and ~~an initial term~~a maturity date of ~~30 months.~~May 15, 2022. As of March 31, ~~2020,~~2021, we have funded ~~$39.1~~$46.1 million of our loan commitments.

See "~~We expect to be able to meet our liquidity requirements and other cash obligations from our cash and cash equivalents on hand at March 31, 2020 totaling $131.3 million~~Note 4 – Investment in Real Estate Loans" for additional information concerning these loans and our ~~additional borrowing capacity~~rights to acquire ownership of ~~$150.0 million resulting from~~ the ~~loan documentation amendments described under Item 2.~~ Management’s Discussion and Analysis of Financial Condition and Results of Operations - Management’s Actions in Response to the Effects of COVID-19 on Our Operations - Financial Measures and Liquidity.properties.

We evaluated our notes receivable for potential credit losses by estimating the fair value of the collateral supporting each note receivable at March 31, ~~2020~~2021 based on assumptions related to the expected future performance of the collateral assets and the resulting anticipated net selling value of the assets at capitalization rates that are common for the asset class. Our current estimate of credit losses related to the real estate development loans of ~~$2.5~~$2.6 million as a result of the COVID-19 pandemic is recorded as an allowance for credit losses at March 31, ~~2020 as a result~~2021.

On January 7, 2021, we entered into an underwriting agreement pursuant to which the Company agreed to offer and sell $287.5 million aggregate principal amount of the ~~COVID-19 pandemic.~~Company’s 1.50% convertible senior notes due 2026 (the “Convertible Notes"). The net proceeds from the Convertible Notes Offering, after deducting underwriting discounts and commissions and estimated offering expenses payable by the Company (including net proceeds from the full exercise by the underwriters of their over-allotment option to purchase additional Convertible Notes), were approximately $280.0 million before consideration of the Capped Call Transactions. These proceeds were used to pay the cost of the Capped Call Transactions and to partially repay outstanding obligations under the 2018 Senior Credit Facility and 2017 Term Loan.

The initial conversion rate of the Convertible Notes is 83.4028 shares of common stock per $1,000 principal amount of Convertible Notes, which is equivalent to an initial conversion price of $11.99 per share of common stock based on the 37.5% base conversion premium on the reference price of $8.72 per share. The conversion rate is subject to adjustment in certain circumstances.

On January 7, 2021, in connection with the pricing of the Convertible Notes, and on January 8, 2021, in connection with the full exercise by the Underwriters of their option to purchase additional Convertible Notes pursuant to the Underwriting Agreement, the Company entered into privately negotiated capped call transactions with certain of the underwriters or their respective affiliates and another financial institution (the “Capped Call Counterparties”). The Capped Call Transactions initially cover, subject to anti-dilution adjustments substantially similar to those applicable to the Convertible Notes, the number of shares of common stock underlying the Convertible Notes. The Capped Call Transactions are generally expected to reduce the potential dilution to holders of shares of common stock upon conversion of the Convertible Notes or offset the potential cash payments that the Company could be required to make in excess of the principal amount of any converted Convertible Notes upon conversion thereof, with such reduction or offset subject to a cap.

The effective strike price of the Capped Call Transactions is initially $15.26, which represents a premium of 75.0% over the last reported sale price of the common stock on the New York Stock Exchange on January 7, 2021, and is subject to certain adjustments under the terms of the Capped Call transactions. See “Note 5 – Debt,” for additional information concerning the Convertible Notes, Convertible Notes Offering and the Capped Call Transactions.

Outstanding Indebtedness

Subsequent to quarter-end, a~~t April 30, 2020,~~ at May 1, 2021, we had ~~borrowed $420.0~~$200.0 million ~~on our 2018 Unsecured Credit Facility, which included borrowings of $200.0 million~~outstanding on our $200 Million Term Loan, ~~and $220.0 million on our $400 Million Revolver. Additionally, we had $225.0~~$84.0 million outstanding on our 2017 Term Loan and $225.0 million outstanding on our 2018 Term Loan. Each of the credit facilities was supported by the 5246 hotel properties included in the credit facility borrowing ~~base.~~base and a pledge of the equity securities in each of the entities which own one of the 46 hotel properties, and the respective TRS Lessees. We also had $287.5 million of Convertible Notes outstanding.

Subsequent to quarter-end, at ~~April 30, 2020,~~May 1, 2021, our subsidiary joint venture had ~~$140.0~~$143.5 million outstanding onunder our Joint Venture Credit Facility, which included borrowings of $75.0 million on its $75 million term loan and ~~$65.0~~$68.5 million on its $125 million revolving line of credit. The Joint Venture Credit Facility ~~was supported~~is secured primarily by a first priority pledge of the Borrower's equity interests in the subsidiaries that hold the five hotel ~~properties in~~borrowing base assets, and the ~~joint venture.~~related TRS entities, which wholly own the TRS lessees that lease each of the borrowing base assets.

At March 31, ~~2020,~~2021, we have scheduled debt principal amortization payments during the next twelve months totaling ~~$3.8~~$4.0 million and no debt maturities. ~~Although~~Currently, we ~~believe that we will~~ have the capacity to pay these scheduled principal debt payments using cash on hand or ~~that we will be able to fund them using~~ draws under our $400 Million ~~Revolver, there can be no assurances that our credit facility will be available to repay such amortizing debt as draws under our credit facility are subject to meeting certain financial covenants.~~Revolver.

We intend to use our cash and cash equivalents of $131.3 million at March 31, 2020, our $150.0 million borrowing capacity under our 2018 Unsecured Credit Facility, utilize our Joint Venture Credit Facility, secure or assume term loan financing, or obtain new financing to fund cash requirements. We may not succeed in obtaining new financing on favorable terms, or at all, and we cannot predict the size or terms of future financings. Our failure to obtain new financing could adversely affect our ability to grow our business.

We have obtained financing through debt instruments having staggered maturities and intend to continue to do so in the future. Our debt includes, and may include in the future, debt secured by stock pledges, debt secured by first priority mortgage liens on certain hotel properties and unsecured debt. We believe that we will have adequate liquidity to meet the requirements for scheduled maturities and principal repayments. However, we can provide no assurance that we will be able to refinance our indebtedness as it becomes due and, if refinanced, whether such refinancing will be available on favorable terms.

Our outstanding indebtedness requires us to comply with various financial and other covenants. At March 31, ~~2020,~~2021, we ~~were~~are in compliance with ~~the financial covenants in~~ all of ~~our~~the Company's loan agreements. On ~~May 7, 2020,~~February 5, 2021, the Company entered into certain amendments of the 2018 ~~Unsecured~~Senior Credit Facility, the 2018 Term Loan and the 2017 Term Loan that give us full access to ~~additional borrowing capacity of $150.0 million,~~the $400 Million Revolver (subject to certain conditions), provide for financial covenant waivers through March 31, ~~2021,~~2022, and modify certain financial covenant measures through December 31, 2023.

Additionally, on April 29, 2021, we amended the Joint Venture Credit Facility to provide for certain financial covenant waivers and adjustments as described in “Note 5 – Debt” to the ~~final three quarters~~Condensed Consolidated Financial Statements.

There are currently no defaults under any of ~~2021.~~the Company's mortgage loan agreements.

See "Note 5 - Debt" to the Condensed Consolidated Financial Statements for additional information concerning the loan amendments and our financing arrangements.

A summary of our gross debt at March 31, ~~2020~~2021 is as follows (dollars in thousands):

Lender

Interest Rate

Amortization
Period (Years)

Maturity Date

Number of
Encumbered Properties

Principal Amount
Outstanding

$600 Million Senior Credit and Term Loan Facility (1)

Deutsche Bank AG New York Branch

$400 Million Revolver

2.65% Variable

n/a

March 31, 2023

n/a

20,000

$200 Million Term Loan

2.60% Variable

n/a

April 1, 2024

n/a

200,000

Total Senior Credit and Term Loan Facility

220,000

Joint Venture Credit Facility (2)

Bank of America, N.A.

$125 Million Revolver

2.40% Variable

n/a

October 8, 2023

n/a

67,500

$75 Million Term Loan

2.35% Variable

n/a

October 8, 2023

n/a

75,000

Total Joint Venture Credit Facility

142,500

Term Loans (1)

KeyBank National Association

Term Loan

2.70% Variable

n/a

November 25, 2022

n/a

126,500

KeyBank National Association

Term Loan

2.40% Variable

n/a

February 14, 2025

n/a

225,000

Convertible Notes

1.50% Fixed

n/a

February 15, 2026

n/a

287,500

Secured Mortgage Indebtedness

MetaBank

4.44% Fixed

July 1, 2027

45,894

KeyBank National Association

4.46% Fixed

February 1, 2023

18,915

4.52% Fixed

April 1, 2023

19,395

4.30% Fixed

April 1, 2023

18,728

4.95% Fixed

August 1, 2023

33,747

Bank of the Cascades

2.11% Variable

December 19, 2024

(3)

8,157

4.30% Fixed

December 19, 2024

—

(3)

8,157

Total Mortgage Loans

152,993

Total Debt

1,154,493

Lender Interest Rate
Amortization
Period (Years)
Maturity Date
Number of
Encumbered Properties

Principal Amount
Outstanding
$600 Million Senior Unsecured Credit and Term Loan Facility ⁽¹⁾

Deutsche Bank AG New York Branch

$400 Million Revolver 2.74% Variable n/a
March 31, 2023 n/a
$ 195,000
$200 Million Term Loan 2.69% Variable n/a
April 1, 2024 n/a
200,000
Total Senior Unsecured Credit Facility

395,000

Joint Venture Credit Facility ⁽²⁾

Bank of America, N.A.
$125 Million Revolver 3.14% Variable n/a
October 8, 2023 n/a
65,000
$75 Million Term Loan 3.09% Variable n/a
October 8, 2023 n/a
75,000
Total Joint Venture Credit Facility 140,000

Unsecured Term Loans ⁽¹⁾

KeyBank National Association

Term Loan 2.74% Variable n/a
November 25, 2022 n/a
225,000
KeyBank National Association
Term Loan 2.49% Variable n/a
February 14, 2025 n/a
225,000

Secured Mortgage Indebtedness

MetaBank 4.44% Fixed 25
July 1, 2027 3
46,965
KeyBank National Association 4.46% Fixed 30
February 1, 2023 3
19,393
4.52% Fixed 30
April 1, 2023 3
19,874
4.30% Fixed 30
April 1, 2023 3
19,207
4.95% Fixed 30
August 1, 2023 2
34,509
Bank of the Cascades 2.99% Variable 25
December 19, 2024 1
(3) 8,424
4.30% Fixed 25
December 19, 2024 —
(3) 8,424
Total Mortgage Loans

156,796
Total Debt
15
$ 1,141,796

(1)The $600 Million Senior Revolving Credit and Term Loan Facility and Term Loans are supported by a borrowing base of 52 unencumbered hotel properties and a pledge of the equity securities of the entities that own and operate the 52 unencumbered hotels.


~~(1)~~	~~The $600 Million Senior Secured Credit and Term Loan Facility and Unsecured Term Loans are supported by a borrowing base of 52 unencumbered hotel properties.~~


~~(2)~~	~~The Joint Venture Credit Facility is secured by pledges of the equity in the entities (and affiliated entities) that own the hotels.~~


~~(3)~~	~~The Bank of Cascades mortgage loan is comprised of two promissory notes that are secured by the same collateral and cross-defaulted.~~

(2)The Joint Venture Credit Facility is secured by pledges of the equity in the entities (and affiliated entities) that own the hotels.

(3)The Bank of Cascades mortgage loan is comprised of two promissory notes that are secured by the same collateral and cross-defaulted.

We are exposed to interest rate risk through our variable-rate debt. We manage this risk primarily by managing the amount, sources, and duration of our debt funding and through the use of derivative financial instruments. Specifically, we enter into derivative financial instruments to manage our exposure to known or expected cash payments related to our variable-rate debt. During the three months ended March 31, ~~2020,~~2021, the fair value of our interest rate swaps ~~declined $19.0~~increased $6.2 million due to ~~a reduction~~an increase in ~~short term~~ interest ~~rates and a continued flattening of the forward yield curve.~~rate expectations. Each interest rate swap fixes the interest rates on portions of our variable interest rate ~~unsecured~~ indebtedness and converts LIBOR from a floating rate to average fixed rates ranging from 1.98% to 2.93%.

Capital Expenditures

During the three months ended March 31, ~~2020,~~2021, we funded ~~$11.1~~$3.6 million in capital expenditures at our hotel properties. ~~As described under~~ ~~Item 2.~~Management’s Discussion and Analysis of Financial Condition and Results of Operations - Management’s Actions in Response to the Effects of COVID-19 on Our Operations - Financial Measures and Liquidity, we postponed all non-essential capital improvement projects planned for 2020 beyond those that are already substantially complete, which is expected to reduce previously planned total capital expenditures by at least $35.0 million for 2020. We anticipate spending an estimated ~~$25.0~~$20.0 million to $30.0 million on capital expenditures ~~during fiscal year 2020.~~across our portfolio in 2021 assuming a reasonable recovery in lodging demand occurs throughout the year. We expect to fund these expenditures through a combination of cash on hand, working capital, borrowings under our $400 Million Revolver, or other potential sources of capital, to the extent available to us.

Cash Flows

For the
Three Months Ended
March 31,
2020 2019 Change
(in thousands)
Net cash provided by operating activities $ 7,306
$ 30,240
$ (22,934 )
Net cash used in investing activities (12,720 ) (10,316 ) (2,404 )
Net cash provided by (used in) financing activities 95,445
(21,541 ) 116,986
Net change in cash, cash equivalents and restricted cash $ 90,031
$ (1,617 ) $ 91,648


	For the Three Months Ended March 31,
	2021		2020		Change
	(in thousands)
Net cash (used in) provided by operating activities	$	(3,167)	$	7,306	$	(10,473)
Net cash used in investing activities	(6,243)		(12,720)		6,477
Net cash provided by financing activities	17,902		95,445		(77,543)
Net change in cash, cash equivalents and restricted cash	$	8,492	$	90,031	$	(81,539)

Changes from the three months ended March 31, ~~2020~~2021 compared to the three months ended March 31, ~~2019~~2020 were due to the following:

•

~~Cash provided by operating activities. This decrease primarily resulted from a decrease in net income of $18.9~~•Cash (used in) provided by operating activities. This decrease primarily resulted from a decrease in net income of $20.5 million after adjusting for non-cash items, such as depreciation and amortization and gains on the sale of assets, partially offset by net changes in working capital of $10.1 million. The overall decrease is primarily due to the effects of the COVID-19 pandemic, and net changes in working capital of $4.1 million primarily due to the timing of working capital changes. The overall decrease is primarily due to a significant decline in occupancy in the last few weeks of the quarter ended March 31, 2020 as a result of the COVID-19 pandemic.

•Cash used in investing activities. This decrease in cash used in investing activities is primarily due to a reduction in capital expenditures of $7.5 million, partially offset by an increase in net real estate loan funding of $1.0 million.

•Cash provided by financing activities. Cash provided by financing activities for the quarter ended March 31, 2020 was primarily the result of net borrowings under our revolving line of credit during the quarter ended March 31, 2020 of approximately $120 million, including a net $100.0 million precautionary draw at the end of the first quarter ended March 31, 2020 to offset the negative effects of the COVID-19 pandemic on our business. We repaid $75.0 million of the net $100.0 million draw during the third quarter of 2020. The net borrowings under our revolving line of credit were offset by dividend payments during the quarter ended March 31, 2020 of approximately $23.0 million. Cash provided by financing activities for the quarter ended March 31, 2021 was primarily the result of borrowings during the period of $317.5 million, including of the issuance of $287.5 million of convertible debt which was used to pay down our $400 Million Revolver, to partially repay outstanding balances under our term loan obligations and to purchase capped call options related to our convertible debt offering for approximately $21.1 million, further offset by debt financing fees of $8.7 million and dividend payments of $3.7 million.


•	~~Cash used in investing activities~~. This increase in cash used in investing activities is primarily due to a reduction in proceeds from asset dispositions of $11.3 million and an increase in net real estate loan funding of $1.5 million, partially offset by a decline in capital expenditures of $6.2 million and a reduction in investments in hotel properties under development of $4.2 million.


•	~~Cash provided by (used in) financing activities~~. This increase is primarily due to an increase in net borrowings of $116.4 million. As described above, during the three months ended March 31, 2020, we increased our borrowings on our $400 Million Revolver as a precautionary measure to provide sufficient liquidity to meet our funding needs for the foreseeable future.

Contractual Obligations

The following table outlines the timing of required payments related to our long-term debt and other contractual obligations at March 31, ~~2020~~2021 (in thousands):


	Payments Due By Period
	Total		Less than One Year		One to Three Years		Four to Five Years		More than Five Years
Debt obligations (1)	$	1,154,493	$	3,951	$	581,078	$	429,901	$	139,563
Currently projected interest (2)	126,188		38,722		65,366		20,202		1,898
Lease obligations (3)	34,164		2,035		2,540		1,825		27,764
Purchase obligations (4)	2,204		2,204		—		—		—
Total	$	1,317,049	$	46,912	$	648,984	$	451,928	$	169,225

Payments Due By Period
Total
Less than
One Year

One to Three
Years

Four to Five
Years

More than
Five Years
Debt obligations ⁽¹⁾
$ 1,141,796
$ 3,797
$ 482,249
$ 414,837
$ 240,913
Currently projected interest ⁽²⁾
149,918
39,752
77,629
28,824
3,713
Lease obligations ⁽³⁾
36,318
2,159
3,623
1,855
28,681
Purchase obligations ⁽⁴⁾
5,072
5,072
—
—
—
Total $ 1,333,104
$ 50,780
$ 563,501
$ 445,516
$ 273,307


~~(1)~~	~~Amounts shown include amortization of principal and debt maturities.~~


~~(2)~~	~~Interest payments on our variable rate debt have been estimated using the interest rates in effect at March 31, 2020, after giving effect to our interest rate swaps.~~


~~(3)~~	~~Amounts consist primarily of non-cancelable ground lease and corporate office lease obligations.~~


~~(4)~~	~~This amount represents purchase orders and executed contracts for development or renovation projects at our hotel properties.~~

(1)Amounts shown include amortization of principal and debt maturities.

(2)Interest payments on our variable rate debt have been estimated using the interest rates in effect at March 31, 2021, after giving effect to our interest rate swaps.

(3)Amounts consist primarily of non-cancelable ground lease and corporate office lease obligations.

(4)This amount represents purchase orders and executed contracts for development or renovation projects at our hotel properties.

Critical Accounting Policies

For critical accounting policies, see "Note 2 - Basis of Presentation and Significant Accounting Policies" to the Condensed Consolidated Financial Statements.

Cybersecurity

The hospitality industry and certain of the major ~~hotel~~brand and franchise companies have recently experienced cybersecurity breaches. We ~~have~~are not ~~experienced~~aware of any material cybersecurity losses at any of our properties. We manage cybersecurity risks with our franchisors and property management companies. An important part of our cybersecurity risk mitigation efforts includes maintaining cybersecurity insurance and indemnifications in certain of our property management agreements. Our Board of Directors provides on-going oversight of management's approach to managing cybersecurity risks.

Item 3. Quantitative and Qualitative Disclosures about Market Risk.

Market risk includes risks that arise from changes in interest rates, foreign currency exchange rates, commodity prices, equity prices and other market changes that affect market-sensitive instruments. In pursuing our business strategies, the primary market risk to which we are exposed is interest rate risk. Our primary interest rate exposure is to 30-day LIBOR. We primarily use derivative financial instruments to manage interest rate risk.

Our interest rate derivatives are based on USD-LIBOR. In July 2017, the Financial Conduct Authority (“FCA”) that

regulates LIBOR announced it intends to stop compelling banks to submit rates for the calculation of LIBOR after 2021. As a result, the Federal Reserve Board and the Federal Reserve Bank of New York organized the Alternative Reference Rates Committee, which identified the Secured Overnight Financing Rate ("SOFR") as its preferred alternative to USD-LIBOR in derivatives and other financial contracts. The Company has contracts that are indexed to LIBOR and is monitoring and evaluating the related changes and risks. ~~The Company is not able to predict when~~ LIBOR will cease to be available ~~or when there will be sufficient liquidity in the SOFR markets. Any~~after 2021. The transition from LIBOR to SOFR or another benchmark interest rate will result in a different calculation of our variable interest rates that are currently indexed to LIBOR. ~~If adequate and reasonable means do not exist for ascertaining LIBOR and such circumstances are unlikely to be temporary, our~~Our loan agreements contain provisions for our lenders and us to ~~jointly~~ establish an alternative interest rate.

At March 31, ~~2020,~~2021, we were party to four interest rate derivative agreements pursuant to which we receive variable-rate payments in exchange for making fixed-rate payments (dollars in thousands):

Contract date

Effective Date

Expiration Date

Notional Amount

October 2, 2017

January 29, 2018

January 31, 2023

100,000

October 2, 2017

January 29, 2018

January 31, 2023

100,000

June 11, 2018

September 28, 2018

September 30, 2024

75,000

June 11, 2018

December 31, 2018

December 31, 2025

125,000

400,000

Contract date Effective Date Expiration Date Notional Amount
October 2, 2017 January 29, 2018 January 31, 2023 $ 100,000
October 2, 2017 January 29, 2018 January 31, 2023 100,000
June 11, 2018 September 28, 2018 September 30, 2024 75,000
June 11, 2018 December 31, 2018 December 31, 2025 125,000
$ 400,000

At March 31, 2021, after giving effect to our interest rate derivative agreements, $832.3 million, or 72%, of our debt had fixed interest rates and $322.2 million, or 28%, had variable interest rates. The percentage of debt with fixed rates increased during the first quarter of 2021 primarily as the result of the issuance of $287.5 million of fixed rate Convertible Notes (See "Note 5 - Debt" to the Condensed Consolidated Financial Statements). At December 31, 2020, after giving effect to our interest rate derivative agreements, ~~$548.4~~$545.8 million, or ~~48.0%~~50%, of our debt had fixed interest rates and ~~$593.4~~$555.7 million, or 52.0%, had variable interest rates. At December 31, 2019, after giving effect to our interest rate derivative agreements, $549.2 million, or 53.7%, of our debt had fixed interest rates and $473.5 million, or 46.3%50%, had variable interest rates. Taking into consideration our existing interest rate swaps an increase or decrease in interest rates of 1.0% would decrease or increase, respectively, our cash flows by approximately ~~$5.9~~$3.2 million per year.

As our fixed-rate debts mature, they will become subject to interest rate risk. In addition, as our variable-rate debts mature, lenders may impose interest rate floors on new financing arrangements because of the low interest rates experienced during the past few years. At March 31, ~~2020,~~2021, we have scheduled debt principal amortization payments during the next twelve months totaling ~~$3.8~~$4.0 million and no debt maturities.

Item 4. Controls and Procedures.

Controls and Procedures

Disclosure Controls and Procedures

Our management evaluated, with the participation of our Chief Executive Officer and our Chief Financial Officer, the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) as of March 31, ~~2020.~~2021. Based on that evaluation, our Chief Executive Officer and our Chief Financial Officer concluded that, as of March 31, ~~2020,~~2021, our disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

During the three months ended March 31, 2020, our hotels were operating with significantly reduced staff as a result of the COVID-19 pandemic. As a result, some of the internal controls associated with our hotel operations, such as segregation of incompatible duties, could not fully operate in the manner in which they were designed under normal operating conditions. Therefore, we have increased our corporate oversight and review of hotel operations and financial information to mitigate the temporary inability of our hotels to fully function within their normal internal control structures.

There were no ~~other~~ changes in our internal control over financial reporting during the three-month period covered by this Quarterly Report on Form 10-Q, which were identified in connection with management’s evaluation required by Rules 13a-15(d) and 15d-15(d) under the Exchange Act, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II — OTHER INFORMATION

Item 1. Legal Proceedings.

We are involved from time to time in litigation arising in the ordinary course of business; however, there are currently no pending legal actions that we believe would have a material adverse effect on our financial position or results of operations.

Item 1A. Risk Factors.

~~We are updating~~There have been no material changes from the risk ~~factor~~factors disclosed in the “Risk Factors” section of our Annual Report on Form 10-K for the year ended December 31, 2019, “The outbreak of the Coronavirus or an outbreak of other highly infectious diseases, could adversely affect the number of guests visiting our hotel properties and disrupt our operations, resulting in a material adverse effect on our business, financial condition, results of operations and cash flows,” as follows:

2020.

The novel coronavirus (COVID-19) pandemic has disrupted and may further disrupt our business, which could further materially adversely affect our operations, financial position and results of operations.

The COVID-19 pandemic has materially adversely affected and may continue to materially adversely affect our financial position and results of operations. The extent to which the COVID-19 pandemic will affect our business, liquidity, financial condition, and results of operations, will depend on numerous evolving factors that we may not be able to accurately predict or assess, including the duration and scope of the pandemic; the negative effect on the domestic and global economies; the short and long-term effects on the demand for guestrooms and levels of consumer confidence; our ability to successfully mitigate the effects caused by the pandemic; government action, including restrictions on travel; increased unemployment; and reductions in business and consumer discretionary spending. Even if COVID-19 does not continue to spread significantly, the perceived risk of infection or health risk may adversely affect consumer confidence, which will adversely affect our business, liquidity, financial condition and results of operations. We have been and could continue to be adversely affected by government restrictions on public gatherings, shelter-in-place orders and government-mandated or voluntary temporary suspension of operations of certain of our properties. We are unable to predict when restrictive measures may be reduced or eliminated or how quickly our operations will return to levels consistent with recent fiscal years after the restrictive measures are reduced or eliminated.

We borrowed a net amount of $100.0 million on our $400 Million Revolver during the three months ended March 31, 2020 and an additional $25.0 million on April 1, 2020 as a precautionary measure to provide sufficient liquidity to meet our funding needs for the foreseeable future during the COVID-19 pandemic and the expected economic recovery. We have amended our loan agreements to provide an additional $150.0 million of borrowing capacity. The increase in our level of debt may adversely affect or restrict our financial and operating activities or our ability to incur additional debt. In addition, as a result of the risks described above, we may be required to raise additional capital, and there is no guarantee that debt or equity financings will be available in the future to fund our obligations, or will be available on terms consistent with our expectations or at all.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.


Period	Total Shares Purchased	Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs
January 1, 2021 - January 31, 2021	—	$	—	—	—
February 1, 2021 - February 28, 2021	—	$	—	—	—
March 1, 2021 - March 31, 2021	155,605	$	10.29	—	—
Total	155,605	$	10.29	—	—

Period Total Shares Purchased Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs
January 1, 2020 - January 31, 2020 —
$ —
—
—
February 1, 2020 - February 29, 2020 —
$ —
—
—
March 1, 2020 - March 31, 2020 65,345
$ 7.17
—
—
Total 65,345
$ 7.17
—
—

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

~~None.~~On April 29, 2021, Summit JV MR 1, LLC (the “Borrower”), as borrower, Summit Hospitality JV, LP (the “Parent”), as parent and each party executing the credit facility documentation as a subsidiary guarantor, entered into a Third Amendment to Credit Agreement concerning the Joint Venture Credit Facility (the “Joint Venture Amendment”) with Bank of America, N.A., as administrative agent, and Bank of America, N.A., KeyBank National Association and Bank of Montreal, Chicago Branch, as lenders.

Certain financial and other covenants under the Joint Venture Credit Facility were waived or adjusted, as described in more detail in “Note 5 – Debt” to the Condensed Consolidated Financial Statements.

See “Note 5 – Debt” to the Condensed Consolidated Financial Statements for additional information concerning the Joint Venture Amendment.

Item 6. Exhibits.

The following exhibits are filed as part of this report:



Exhibit
Number						Description of Exhibit
~~31.1†~~10.1†						Third Amendment to Credit Agreement dated April 29, 2021 among Summit JV MR 1, LLC, as borrower, Summit Hospitality JV, LP, as parent guarantor, each party executing the credit facility documentation as a subsidiary guarantor, Bank of America, N.A., as administrative agent, and a syndicate of lenders including Bank of America, N.A., KeyBank National Association and Bank of Montreal, Chicago Branch.
31.1†						Certification of Chief Executive Officer of Summit Hotel Properties, Inc. pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2†						Certification of Chief Financial Officer of Summit Hotel Properties, Inc. pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1††						Certification of Chief Executive Officer of Summit Hotel Properties, Inc. pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2††						Certification of Chief Financial Officer of Summit Hotel Properties, Inc. pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS						The instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document.
101.SCH						Inline XBRL Taxonomy Extension Schema Document ⁽¹⁾
101.CAL						Inline XBRL Taxonomy Extension Calculation Linkbase Document ⁽¹⁾
101.DEF						Inline XBRL Taxonomy Extension Definition Linkbase Document ⁽¹⁾
101.LAB						Inline XBRL Taxonomy Extension Labels Linkbase Document ⁽¹⁾
101.PRE						Inline XBRL Taxonomy Presentation Linkbase Document ⁽¹⁾

† - Filed herewith

†† - Furnished herewith

(1) - Submitted electronically herewith

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.



	SUMMIT HOTEL PROPERTIES, INC. (registrant)

Date: May ~~11, 2020~~4, 2021	By:	/s/ Jonathan P. Stanner
		Jonathan P. Stanner ~~Executive Vice~~ President, Chief ~~Financial~~Executive Officer and ~~Treasurer~~ Director (principal executive officer and principal financial officer)


	For the Three Months Ended March 31,							For the Three Months Ended March 31,
	2020			2019				2021		2020
OPERATING ACTIVITIES							OPERATING ACTIVITIES
Net (loss) income	$	(16,214	)	$	12,900
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Net loss							Net loss	$	(32,871)	$	(16,214)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:							Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Depreciation and amortization	27,079			25,536			Depreciation and amortization	27,297		27,079
Amortization of deferred financing costs	457			381			Amortization of deferred financing costs	1,011		457
Loss on impairment of assets	782			—
Loss on impairment and write-off of assets							Loss on impairment and write-off of assets	0		782
Provision for credit losses	2,530			—			Provision for credit losses	0		2,530
Equity-based compensation	1,475			1,352			Equity-based compensation	1,569		1,475
Deferred tax asset, net	2,058			—			Deferred tax asset, net	0		2,058
Loss (gain) on disposal of assets, net	3			(4,166		)
(Gain) loss on disposal of assets, net							(Gain) loss on disposal of assets, net	(50)		3

Non-cash interest income	(791		)	(507		)	Non-cash interest income	(257)		(791)
Debt transaction costs	1			713			Debt transaction costs	116		1
Other	108			149			Other	143		108
Changes in operating assets and liabilities:							Changes in operating assets and liabilities:

Trade receivables, net	1,925			(9,645		)	Trade receivables, net	(2,940)		1,925
Prepaid expenses and other	411			746			Prepaid expenses and other	1,180		411
Accounts payable	1,334			(510		)	Accounts payable	1,082		1,334
Accrued expenses and other	(13,852		)	3,291			Accrued expenses and other	553		(13,852)
NET CASH PROVIDED BY OPERATING ACTIVITIES	7,306			30,240
NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES							NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES	(3,167)		7,306
INVESTING ACTIVITIES							INVESTING ACTIVITIES
Acquisition of hotel properties and land	—			(4,178		)

Improvements to hotel properties	(11,050		)	(17,248		)	Improvements to hotel properties	(3,579)		(11,050)
Proceeds from asset dispositions, net	—			11,310

Funding of real estate loans	(1,670		)	(500		)	Funding of real estate loans	(2,664)		(1,670)
Proceeds from principal payments on real estate loans	—			300

NET CASH USED IN INVESTING ACTIVITIES	(12,720		)	(10,316		)	NET CASH USED IN INVESTING ACTIVITIES	(6,243)		(12,720)
FINANCING ACTIVITIES							FINANCING ACTIVITIES
Proceeds from issuance of debt	165,000			45,000			Proceeds from issuance of debt	317,500		165,000
Principal payments on debt	(45,931		)	(42,326		)	Principal payments on debt	(264,485)		(45,931)

Purchases of capped call options							Purchases of capped call options	(21,131)		0
Dividends paid	(23,031		)	(22,668		)	Dividends paid	(3,709)		(23,031)
Proceeds from contribution by non-controlling interests in joint venture	577			—			Proceeds from contribution by non-controlling interests in joint venture	0		577
Financing fees on debt and other issuance costs	(701		)	(713		)	Financing fees on debt and other issuance costs	(8,671)		(701)
Repurchase of common shares for withholding requirements	(469		)	(834		)	Repurchase of common shares for withholding requirements	(1,602)		(469)
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES	95,445			(21,541		)
NET CASH PROVIDED BY FINANCING ACTIVITIES							NET CASH PROVIDED BY FINANCING ACTIVITIES	17,902		95,445
Net change in cash, cash equivalents and restricted cash	90,031			(1,617		)	Net change in cash, cash equivalents and restricted cash	8,492		90,031
CASH, CASH EQUIVALENTS AND RESTRICTED CASH							CASH, CASH EQUIVALENTS AND RESTRICTED CASH
Beginning of period	69,833			72,556			Beginning of period	38,896		69,833
End of period	$	159,864		$	70,939		End of period	$	47,388	$	159,864
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION							SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash payments for interest	$	9,977		$	11,879		Cash payments for interest	$	(8,890)	$	(9,977)
Accrued improvements to hotel properties	$	3,924		$	5,306		Accrued improvements to hotel properties	$	(1,184)	$	(3,924)

Cash payments for income taxes, net of refunds	$	27		$	(1,049	)	Cash payments for income taxes, net of refunds	$	(39)	$	(27)


	For the Three Months Ended March 31,
	2021		2020
Gain (loss) recognized in Other comprehensive income on derivative financial instruments	$	3,885	$	(19,823)
Loss reclassified from Other comprehensive income to Interest expense	$	(2,318)	$	(779)
Total Interest expense in which the effects of cash flow hedges are recorded	$	(10,788)	$	(11,012)


	Fair Value Measurements at March 31, 2020 using									Fair Value Measurements at March 31, 2021 using
	Level 1		Level 2		Level 3		Total			Level 1		Level 2		Level 3		Total
Assets:									Assets:

Purchase Options related to real estate loans	$	—	$	—	$	8,138	$	8,138	Purchase Options related to real estate loans	$	0	$	0	$	7,161	$	7,161

Liabilities:									Liabilities:
Interest rate swaps	—		35,221		—		35,221		Interest rate swaps	0		24,647		0		24,647


	Fair Value Measurements at December 31, 2020 using
	Level 1		Level 2		Level 3		Total
Assets:

Purchase Options related to real estate loans	$	0	$	0	$	7,161	$	7,161
Liabilities:
Interest rate swaps	0		30,850		0		30,850


	Real Estate Loan 1				Real Estate Loan 2				Real Estate Loan 3
Exercise price	$	15,143			$	17,377			$	37,800

Term	2.59			(1) (2)	2.68			(1) (2)	1.42			(3)
Expected volatility	65.0		%		55.0		%		55.0		%
Risk-free rate	0.3		%		0.3		%		0.2		%
Expected annualized equity dividend yield	6.5		%		7.5		%		0		%



2020	$	1,630
2021	2,065
2022	1,840
2023	969
2024	908
Thereafter	28,906
Total lease payments ⁽¹⁾	36,318
Less interest	(16,934		)
Total	$	19,384


~~(1)~~	~~Certain payments above include future increases to the minimum fixed rent based on the Consumer Price Index in effect at the initial measurement of the lease balances.~~


~~(2)~~	~~The option term is the period from April 1, 2020 through the fully extended maturity dates of the respective mezzanine loans.~~


	Number of Shares	Weighted Average Grant Date Fair Value		Aggregate Current Value
		(per share)		(in thousands)
Non-vested at December 31, 2020	573,577	$	10.18	$	5,168
Granted	366,627	10.47
Vested	(219,636)	11.20

Non-vested at March 31, 2021	720,568	$	10.02	$	7,292


	Number of Shares	Weighted Average Grant Date Fair Value (1)		Aggregate Current Value
		(per share)		(in thousands)
Non-vested at December 31, 2020	922,239	$	11.65	$	8,309
Granted	259,728	14.05
Vested	(182,480)	13.73
Forfeited	(60,823)	13.73
Non-vested at March 31, 2021	938,664	$	11.78	$	9,499


Management Company	Number of Properties	Number of Guestrooms
Affiliates of Aimbridge Hospitality, including Interstate Management Company, LLC	34	5,336
OTO Development, LLC	15	2,164
Stonebridge Realty Advisors, Inc. and affiliates	9	1,312
Affiliates of Marriott, including Courtyard Management Corporation, SpringHill SMC Corporation and Residence Inn by Marriott, Inc.	6	973

White Lodging Services Corporation	4	791
American Liberty Hospitality, Inc.	2	372



Intercontinental Hotel Group Resources, Inc., an affiliate of IHG	1	252
Crestline Hotels & Resorts, LLC	1	88
Total	72	11,288


~~(1)~~	~~On October 25, 2019, Aimbridge Hospitality announced that it had completed a merger with Interstate Hotels & Resorts.~~


Franchise/Brand	Number of Hotel Properties	Number of Guestrooms
Marriott
Courtyard by Marriott	15	2,761
Residence Inn by Marriott	11	1,636
SpringHill Suites by Marriott	5	761
AC Hotel by Marriott	1	255
Marriott	1	165
Fairfield Inn & Suites by Marriott	1	140
Four Points by Sheraton	1	101
Total Marriott	35	5,819
Hilton
Hilton Garden Inn	7	1,067
Hampton Inn & Suites	7	986

Homewood Suites	2	251
DoubleTree by Hilton	1	210
Total Hilton	17	2,514
Hyatt
Hyatt Place	13	1,908
Hyatt House	3	466
Total Hyatt	16	2,374
IHG
Holiday Inn Express & Suites	2	345

Staybridge Suites	1	121
Hotel Indigo	1	115
Total IHG	4	581


Total	72	11,288