SERVICE PROPERTIES TRUST
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(dollars in thousands)
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For the Three Months Ended March 31,
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2021
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2020
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Cash flows from operating activities:
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Net loss
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$
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(194,990)
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$
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(33,650)
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Adjustments to reconcile net loss to cash (used in) provided by operating activities:
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Depreciation and amortization
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124,368
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127,926
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Net amortization of debt issuance costs, discounts and premiums as interest
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4,355
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3,288
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Straight-line rental income
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1,883
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3,543
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Security deposits utilized
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—
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(62,309)
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Loss on asset impairment
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1,211
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16,740
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Unrealized losses on equity securities, net
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6,481
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5,045
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Equity in losses of an investee
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2,843
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718
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Loss on sale of real estate
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9
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6,911
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Other non-cash income, net
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(1,020)
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(1,659)
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Changes in assets and liabilities:
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Due from related persons
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(395)
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196
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Other assets
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(13,515)
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16,725
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Accounts payable and other liabilities
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(13,841)
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8,686
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Due to related persons
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19,887
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4,856
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Net cash (used in) provided by operating activities
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(62,724)
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97,016
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Cash flows from investing activities:
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Real estate acquisitions and deposits
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(7,649)
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(7,113)
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Real estate improvements
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(21,891)
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(31,343)
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Hotel managers’ purchases with restricted cash
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(14,198)
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(48,969)
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Hotel manager’s deposit of insurance proceeds into restricted cash
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—
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15,000
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Net proceeds from sale of real estate
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375
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8,010
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Investment in Sonesta
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(25,443)
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(5,199)
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Net cash used in investing activities
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(68,806)
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(69,614)
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Cash flows from financing activities:
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Borrowings under revolving credit facility
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973,168
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230,000
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Repayments of revolving credit facility
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(51,592)
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(150,000)
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Deferred financing costs
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(303)
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—
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Repurchase of common shares
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—
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(43)
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Distributions to common shareholders
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(1,648)
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(88,863)
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Net cash provided by (used in) financing activities
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919,625
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(8,906)
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Increase in cash and cash equivalents and restricted cash
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788,095
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18,496
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Cash and cash equivalents and restricted cash at beginning of period
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91,456
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81,259
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Cash and cash equivalents and restricted cash at end of period
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$
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879,551
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$
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99,755
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Supplemental disclosure of cash and cash equivalents and restricted cash:
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The following table provides a reconciliation of cash and cash equivalents and restricted cash reported within the condensed consolidated balance sheets to the amount shown in the condensed consolidated statements of cash flows:
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Cash and cash equivalents
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$
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874,455
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$
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55,218
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Restricted cash
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5,096
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44,537
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Total cash and cash equivalents and restricted cash
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$
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879,551
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$
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99,755
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Supplemental cash flow information:
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Cash paid for interest
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$
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98,410
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$
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78,994
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Cash paid for income taxes
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182
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220
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Non-cash investing activities:
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Real estate improvements accrued, not paid
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$
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9,250
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$
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9,858
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Investment in Sonesta
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$
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—
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$
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42,000
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The accompanying notes are an integral part of these condensed consolidated financial statements.
SERVICE PROPERTIES TRUST
Notes to Condensed Consolidated Financial Statements
(dollars in thousands, except share data)
(Unaudited)
Note 1. Organization and Basis of Presentation
Service Properties Trust, or we, us or our, is a real estate investment trust, or REIT, organized on February 7, 1995 under the laws of the State of Maryland, which invests in hotels and net lease service oriented retail properties. At March 31, 2021, we owned, directly and through subsidiaries, 310 hotels and 798 net lease properties.
At March 31, 2021, 305 of our 310 hotels were operated by subsidiaries of the following companies: Sonesta Holdco Corporation, or Sonesta (256 hotels), Hyatt Hotels Corporation, or Hyatt (22 hotels), Radisson Hospitality, Inc., or Radisson (nine hotels), Marriott International, Inc., or Marriott (17 hotels), and InterContinental Hotels Group, plc, or IHG (one hotel). We have entered into an agreement to sell five of our 310 hotels and have entered into a short term lease of these properties with the buyer in anticipation of the sale. At March 31, 2021, we owned 798 net lease properties with 168 tenants, including 179 travel centers leased to TravelCenters of America Inc., or TA, our largest tenant. Hereinafter, these companies are sometimes referred to as managers and/or tenants, or collectively, operators.
Impact of COVID-19
The lodging industry and other industries in which our managers and tenants operate have been adversely impacted by the novel coronavirus, or COVID-19, global pandemic, the federal, state and local government mandates intended to contain and mitigate the spread of COVID-19 and market reactions to the pandemic. These matters continue to have a significant negative impact on our results of operations, financial position and cash flow. Our results of operations and cash flows from our hotels are heavily dependent on our operators’ ability to generate returns to us. Although leisure demand at our hotels has improved through the first quarter of 2021 when compared to 2020 levels, business transient and group demand have been limited and, consistent with trends throughout the U.S. lodging industry, continue to lag in recovery. Although overall lodging activity continues to improve over levels seen since the beginning of the pandemic, and our current expectation is that lodging demand may improve in the second half of 2021 at a more meaningful pace than experienced to date, we expect the recovery in the lodging industry to historical levels may take several years. We cannot predict with certainty when business levels may return to normalized historical levels after the effects of the pandemic subside. We currently expect that the recovery with respect to business transient and group business will be gradual and likely inconsistent. Factors such as public health, availability and effectiveness of COVID-19 vaccines, changes in business practices with regard to travel and the geopolitical environment may impact the timing, extent and pace of such recovery. In addition, consumer confidence and leisure demand will continue to be affected by unemployment, perceptions of the safety of returning to normal activities and broader macroeconomic trends. Under the accounting guidance related to the presentation of financial statements, when preparing financial statements for each annual and interim reporting period, management has the responsibility to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about our ability to continue as a going concern within one year after the date that the financial statements are issued. In applying the accounting guidance, we considered our current financial condition and liquidity sources, including current funds available, forecasted future cash flows and our unconditional obligations due over the next 12 months. As of March 31, 2021, we were not in compliance with one of our debt covenants necessary to incur additional debt, and as a result, we will not be able to incur additional debt until we meet the required covenant level. On January 19, 2021, we borrowed $972,793 under our revolving credit facility as a precautionary measure to preserve financial flexibility and are currently fully drawn under our revolving credit facility. Based on our cash on hand, the cash flows we expect to receive from our net lease portfolio, improving lodging trends and asset dispositions we expect to complete, we believe we will have sufficient liquidity to meet our obligations for at least the next twelve months.
Basis of Presentation
The accompanying condensed consolidated financial statements of us are unaudited. Certain information and disclosures required by U.S. generally accepted accounting principles, or GAAP, for complete financial statements have been condensed or omitted. We believe the disclosures made are adequate to make the information presented not misleading. However, the accompanying condensed consolidated financial statements should be read in conjunction with the financial statements and notes contained in our Annual Report on Form 10-K for the year ended December 31, 2020, or our 2020 Annual Report. In the opinion of management, all adjustments, consisting of normal recurring accruals considered necessary for a fair statement of results for the interim period, have been included. These condensed consolidated financial statements include our accounts and the accounts of our subsidiaries, all of which are 100% owned directly or indirectly by us. All intercompany transactions and balances with or among our consolidated subsidiaries have been eliminated. Our operating results for interim periods and those of our managers and tenants are not necessarily indicative of the results that may be expected for the full year.
SERVICE PROPERTIES TRUST
Notes to Condensed Consolidated Financial Statements
(dollars in thousands, except share data)
(Unaudited)
The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect reported amounts. Actual results could differ from those estimates. Significant estimates in our condensed consolidated financial statements include the allowance for credit losses, purchase price allocations, useful lives of fixed assets, impairment of real estate and related intangibles.
We have determined that each of our wholly owned taxable REIT subsidiaries, or TRSs, is a variable interest entity, or VIE, as defined under the Consolidation Topic of the Financial Accounting Standards Board, or FASB, Accounting Standards Codification™. We have concluded that we must consolidate each of our wholly owned TRSs because we are the entity with the power to direct the activities that most significantly impact such VIEs’ performance and we have the obligation to absorb losses or the right to receive benefits from each VIE that could be significant to the VIE and are, therefore, the primary beneficiary of each VIE. The assets of our TRSs were $140,211 and $118,862 as of March 31, 2021 and December 31, 2020, respectively, and consist primarily of amounts due from and working capital advances to certain of our hotel managers. The liabilities of our TRSs were $91,220 and $70,240 as of March 31, 2021 and December 31, 2020, respectively, and consist primarily of amounts payable to certain of our hotel managers. The assets of our TRSs are available to satisfy our TRSs’ obligations and we have guaranteed certain obligations of our TRSs.
Note 2. Revenue Recognition
We report hotel operating revenues for managed hotels in our condensed consolidated statements of income (loss). We generally recognize hotel operating revenues, consisting primarily of room and food and beverage sales, when goods and services are provided.
We report rental income for leased properties in our condensed consolidated statements of income (loss). We recognize rental income from operating leases on a straight line basis over the term of the lease agreements. We reduced rental income by $1,883 and $3,543 during the three months ended March 31, 2021 and 2020, respectively, to record scheduled rent changes under certain of our leases, the deferred rent obligations payable to us under our leases with TA and the estimated future payments to us under our TA leases for the cost of removing underground storage tanks at our travel centers on a straight line basis. See Notes 5 and 9 for further information regarding our TA leases. Due from related persons includes $30,597 and $33,902 and other assets, net, includes $17,660 and $16,264 of straight line rent receivables at March 31, 2021 and December 31, 2020, respectively.
Certain of our lease agreements require additional percentage rent if gross revenues of our properties exceed certain thresholds defined in our lease agreements. We may determine percentage rent due to us under our leases monthly, quarterly or annually, depending on the specific lease terms, and recognize it when all contingencies are met and the rent is earned. We had deferred estimated percentage rent of $1,386 and $725 for the three months ended March 31, 2021 and 2020, respectively.
Note 3. Weighted Average Common Shares
The following table provides a reconciliation of the weighted average number of common shares used in the calculation of basic and diluted earnings per share:
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For the Three Months Ended March 31,
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2021
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2020
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(in thousands)
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Weighted average common shares for basic earnings per share
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164,498
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164,370
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Effect of dilutive securities: Unvested share awards
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—
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—
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Weighted average common shares for diluted earnings per share
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164,498
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164,370
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Note 4. Real Estate Properties
At March 31, 2021, we owned 310 hotels with an aggregate of 49,015 rooms or suites and 798 service-oriented retail properties with an aggregate of 13,452,608 square feet that are primarily subject to “triple net” leases, or net leases where the tenant is generally responsible for payment of operating expenses and capital expenditures of the property during the lease term. Our properties had an aggregate undepreciated carrying value of $11,204,220, including $13,805 classified as held for sale as of March 31, 2021.
SERVICE PROPERTIES TRUST
Notes to Condensed Consolidated Financial Statements
(dollars in thousands, except share data)
(Unaudited)
During the three months ended March 31, 2021, we funded $29,037 for improvements to certain of our properties.
Acquisitions
On March 9, 2021, we acquired a land parcel adjacent to a property we own in Nashville, TN for a purchase price of $7,709, including acquisition related costs. We accounted for this transaction as an acquisition of assets.
Dispositions
We sold one net lease property with 2,797 square feet for $375, excluding closing costs, during the three months ended March 31, 2021. As a result of this sale, we recorded a net loss on sale of real estate of $9 during the three months ended March 31, 2021. In April 2021, we sold one hotel with 146 rooms that was subject to a ground lease pursuant to a purchase option exercised by the third party lessor for $9,753, excluding closing costs, and one net lease property with 32,130 square feet for $1,206, excluding closing costs.
We have entered into an agreement to sell five hotels with an aggregate of 430 rooms in four states and an aggregate carrying value of $10,699 for an aggregate sales price of $22,263, excluding closing costs. We have also entered into agreements to sell two net lease properties with an aggregate of 35,330 square feet and an aggregate carrying value of $1,439 for an aggregate sales price of $1,581, excluding closing costs. We currently expect these sales to be completed by the end of the second quarter of 2021. However, these sales are subject to conditions and we cannot be sure that we will complete these sales or that these sales will not be delayed, or the terms will not change.
As of March 31, 2021, we had five hotels with an aggregate of 430 rooms and an aggregate carrying value of $10,699 classified as held for sale and six net lease properties with an aggregate of 45,745 square feet and an aggregate carrying value of $3,106 classified as held for sale. See Notes 5 and 12 for further information on these properties.
Note 5. Management Agreements and Leases
As of March 31, 2021, we owned 310 hotels which were included in seven operating agreements and 798 service oriented retail properties net leased to 168 tenants. We do not operate any of our properties.
Hotel agreements
As of March 31, 2021, 305 of our hotels were leased to our TRSs and managed by independent hotel operating companies. As of March 31, 2021, our hotel properties were managed by separate subsidiaries of Sonesta, Hyatt, Radisson, Marriott and IHG under six agreements. These hotel agreements had initial terms expiring between 2021 and 2037. Each of these agreements is for between one and 203 of our hotels. In general, the agreements contain renewal options for all, but not less than all, of the affected properties included in each agreement, and the renewal terms range between one to 60 years. Most of these agreements require the third party manager or tenant to: (1) make payments to us of minimum returns or minimum rents; (2) deposit a percentage of total hotel sales into FF&E reserves; and (3) for our managed hotels, make payments to our TRSs of additional returns to the extent of available cash flows after payment of operating expenses, payment of certain management fees, payment of our minimum returns, reimbursement of certain advances, funding of our FF&E reserves and replenishment of guarantees. In the past, some of our managers or tenants or their affiliates provided deposits or guarantees to secure their obligations to pay us. We have also entered into an agreement to sell five of our hotels and have entered into a short term lease of these properties with the buyer in anticipation of the sale.
Sonesta agreement. As of March 31, 2021, Sonesta managed 41 of our full-service hotels, 157 extended stay hotels and 58 select service hotels pursuant to management agreements for each of the hotels. We are also party to pooling agreements that combine certain of our management agreements with Sonesta for purposes of calculating gross revenues, payment of hotel operating expenses, payment of fees and distributions and minimum returns due to us. Our agreements with Sonesta for 53 hotels expire in January 2037, which we refer to as our legacy management and pooling agreements. As of January 1, 2021, 115 of our hotels were managed by Sonesta under agreements that expire on December 31, 2021 and automatically renew for successive one-year terms unless terminated earlier, which we refer to as our conversion hotel management and pooling agreements or collectively with our legacy agreements, our Sonesta agreement.
SERVICE PROPERTIES TRUST
Notes to Condensed Consolidated Financial Statements
(dollars in thousands, except share data)
(Unaudited)
In February and March 2021, we transferred the branding and management of 88 hotels to Sonesta from Marriott. We added these hotels to our conversion hotel management and pooling agreements with Sonesta. Following this transition and rebranding, Sonesta operates 256 of the 310 hotels we currently own, which comprises approximately 52.2% of our total historical real estate investments as of March 31, 2021.
In January 2021, we received a notice of termination from Hyatt that terminated our management agreement with Hyatt for 22 of our hotels, or our Hyatt agreement, effective as of April 8, 2021, as a result of Hyatt’s guarantee being exhausted. On April 7, 2021, we and Hyatt agreed to a short term extension of the termination date to May 22, 2021. We and Hyatt are currently in discussions regarding possible changes to our Hyatt agreement that may result in some or all of the hotels remaining Hyatt managed. However, if such discussions with Hyatt do not result in a mutually acceptable agreement for Hyatt to continue to manage some or all of these hotels, we expect to transition management of those hotels to Sonesta on or about June 1, 2021.
Our Sonesta agreement provides that we are paid a fixed annual minimum return equal to 8% of our invested capital, as defined therein, if gross revenues of the hotels, after payment of hotel operating expenses and management and related fees (other than Sonesta’s incentive fee, if applicable), are sufficient to do so. Our fixed annual minimum return under our Sonesta agreement was $502,494 as of March 31, 2021. Our Sonesta agreement further provides that we are paid an additional return equal to 80% of the operating profits, as defined therein, after reimbursement of owner or manager advances, FF&E reserve escrows and Sonesta’s incentive fee, if applicable. Our Sonesta hotels generated net operating cash flow deficits of $37,394 and $8,146 during the three months ended March 31, 2021 and 2020, respectively. The returns we receive from our Sonesta hotels are limited to the hotels’ available cash flows, if any, after payment of operating expenses, including management and related fees.
Pursuant to our Sonesta agreement, we incurred management, reservation and system fees and reimbursement costs for certain guest loyalty, marketing program and third-party reservation transmission fees of $11,275 and $6,779 for the three months ended March 31, 2021 and 2020, respectively. These fees and costs are included in hotel operating expenses in our condensed consolidated statements of income (loss). In addition, we incurred procurement and construction supervision fees of $743 and $633 for the three months ended March 31, 2021 and 2020, respectively, which amounts have been capitalized in our condensed consolidated balance sheets and are depreciated over the estimated useful lives of the related capital assets.
Our Sonesta agreement requires us to fund capital expenditures that we approve at our Sonesta hotels. Each of our 14 full-service hotels operated under the legacy management agreements and all the hotels operated under the conversion hotel management agreements require that 5% of the hotel gross revenues be escrowed for future capital expenditures as FF&E reserves, subject to available cash flows after payment of the annual minimum returns due to us. Our legacy management agreements do not require FF&E escrow deposits for 39 extended stay hotels. No FF&E escrow deposits were required during the three months ended March 31, 2021. We funded $21,713 and $29,036 for capital expenditures to certain hotels included in our Sonesta agreement during the three months ended March 31, 2021 and 2020, respectively, which resulted in increases in our contractual annual minimum returns of $1,737 and $2,141, respectively. We owed Sonesta $41,361 and $13,323 for operating losses generated by our Sonesta hotels, capital expenditures, and other reimbursements at March 31, 2021 and 2020, respectively. Amounts due from Sonesta are included in due from related persons and amounts owed to Sonesta are included in due to related persons in our condensed consolidated balance sheets.
We are required to maintain working capital for each of our hotels managed by Sonesta and have advanced a fixed amount based on the number of rooms in each hotel to meet the cash needs for hotel operations. We had advanced $55,360 and $41,514 of initial working capital to Sonesta as of March 31, 2021 and December 31, 2020, respectively. These amounts are included in other assets in our condensed consolidated balance sheets. Any remaining working capital would be returned to us upon termination in accordance with the terms of our Sonesta agreement.
SERVICE PROPERTIES TRUST
Notes to Condensed Consolidated Financial Statements
(dollars in thousands, except share data)
(Unaudited)
Accounting for Investment in Sonesta:
We account for our 34% non-controlling interest in Sonesta under the equity method of accounting. In March 2021, we funded a $25,443 capital contribution to Sonesta related to its acquisition of Red Lion Hotels Corporation. We continue to maintain our 34% ownership in Sonesta after giving effect to this funding. As of March 31, 2021, our investment in Sonesta had a carrying value of $59,246. This amount is included in other assets, net in our condensed consolidated balance sheets. The cost basis of our investment in Sonesta exceeded our proportionate share of Sonesta’s total shareholders’ equity book value on the date of acquisition of our initial equity interest in Sonesta, February 27, 2020, by an aggregate of $8,000. As required under GAAP, we are amortizing this difference to equity in earnings of an investee over 31 years, the weighted average remaining useful life of the real estate assets and intangible assets and liabilities owned by Sonesta as of the date of our acquisition. We recorded amortization of the basis difference of $65 in the three months ended March 31, 2021. We recognized losses of $2,778 and $718 related to our investment in Sonesta for the three months ended March 31, 2021 and 2020, respectively. These amounts are included in equity in losses of an investee in our condensed consolidated statements of income (loss).
We recorded a liability for the fair value of our initial investment in Sonesta, as no cash consideration was exchanged related to the modification of our management agreement with, and investment in, Sonesta. This liability for our investment in Sonesta is included in accounts payable and other liabilities in our condensed consolidated balance sheet and is being amortized on a straight-line basis through January 31, 2037, as a reduction to hotel operating expenses in our condensed consolidated statements of income (loss). We reduced hotel operating expenses by $621 and $207 for the three months ended March 31, 2021 and 2020, respectively, for amortization of this liability. As of March 31, 2021, the unamortized balance of this liability was $39,310.
See Note 9 for further information regarding our relationship, agreements and transactions with Sonesta.
Hyatt agreement. Our Hyatt agreement was originally scheduled to expire in 2030. Pursuant to our Hyatt agreement, Hyatt had provided us with a guaranty, which was limited to $50,000. During the year ended December 31, 2020, we exhausted the remaining limited guaranty available to us to cover shortfalls in the minimum return due to us. In January 2021, we received a notice of termination from Hyatt that terminated our Hyatt agreement, effective as of April 8, 2021, as a result of Hyatt’s guaranty being exhausted. On April 7, 2021, we and Hyatt agreed to a short term extension of the termination date to May 22, 2021. We and Hyatt are currently in discussions regarding possible changes to our Hyatt agreement that may result in some or all of the hotels remaining Hyatt managed. However, if such discussions do not result in a mutually acceptable agreement for Hyatt to continue to manage some or all of these hotels, we expect to transition management of those hotels to Sonesta on or about June 1, 2021.
We realized returns of $1,555 and $5,509 during the three months ended March 31, 2021 and 2020, respectively, under our Hyatt agreement. Any returns we receive from Hyatt are limited to the hotels’ available cash flows, if any, after payment of operating expenses.
Marriott agreement. As of January 1, 2021, Marriott managed 105 of our hotels under agreements we had terminated in 2020 for Marriott’s failure to cover the cumulative shortfall between the payments we had received and 80% of the cumulative priority returns due to us in accordance with the agreement. We transferred the branding and management of 88 Marriott hotels to Sonesta in February and March 2021. As of March 31, 2021, Marriott managed 17 of our hotels. We sold of these hotels in April 2021 (see Note 4 for further information regarding this sale). We are in arbitration proceedings with Marriott regarding, among other things, the timing and characterization of certain payments made to us, including Marriott’s assertion we are required to refund $19,120 of minimum return advances made to us in 2020, and the validity of the timing of the termination of the Marriott agreements, including an exit hotel agreement which, if not terminated, would require us to sell the 16 hotels encumbered with a Marriott brand. We are also seeking repayment of certain working capital advances we made to Marriott during 2020. We have entered an agreement with Marriott regarding the 16 hotels noted above, pursuant to which we agreed to have these hotels remain Marriott branded hotels until the arbitration is resolved.
Our Marriott hotels generated net operating cash flow deficits of $14,921 during the three months ended March 31, 2021. Any returns we receive from Marriott are limited to the hotels available cash flows, if any, after payment of operating expenses. Marriott managed 122 of our hotels during the three months ended March 31, 2020 and we realized returns of $47,648 from our Marriott branded hotels during that period.
SERVICE PROPERTIES TRUST
Notes to Condensed Consolidated Financial Statements
(dollars in thousands, except share data)
(Unaudited)
Radisson agreement. Our management agreement with Radisson for nine hotels, or our Radisson agreement, which expires in 2037, provides that, as of March 31, 2021, we are to be paid an annual minimum return of $20,601. We realized minimum returns of $5,150 and $5,111 during the three months ended March 31, 2021 and 2020, respectively, under our Radisson agreement. Pursuant to our Radisson agreement, Radisson has provided us with a guaranty, which is limited to $47,523. During the three months ended March 31, 2021, the hotels under our Radisson agreement generated cash flows that were less than the minimum returns due to us for the period and Radisson made $7,931 of guaranty payments to cover the shortfall. The available balance of the guaranty was $5,306 as of March 31, 2021. In addition to our minimum returns, our Radisson agreement provides for payment to us of 50% of the hotels’ available cash flows after payment of operating expenses, funding the required FF&E reserve, payment of our minimum returns, reimbursement of our working capital advances and reimbursement to Radisson of working capital and guaranty advances, if any.
Other. Our management agreement with IHG for one hotel expires on January 31, 2026. Our IHG hotel generated net operating cash flow deficits of $1,502 during the three months ended March 31, 2021. Any returns we receive from IHG are limited to the hotels’ available cash flows, if any, after payment of operating expenses. IHG managed or leased 103 hotels during the three months ended March 31, 2020. We realized returns of $54,085 under our IHG agreement during that period.
We have entered into an agreement to sell five hotels and leased them to the buyer in anticipation of the sale and recognized $455 of rental income during the three months ended March 31, 2021. See Note 4 for further information regarding this sale.
Net lease portfolio
As of March 31, 2021, we owned 798 net lease service-oriented retail properties with 13,452,608 square feet with leases requiring annual minimum rents of $375,811 with a weighted (by annual minimum rents) average remaining lease term of 10.7 years. The portfolio was 98.5% leased by 168 tenants operating under 130 brands in 21 distinct industries.
During the three months ended March 31, 2021, we collected 93.1% of rents due from our net lease tenants. In April 2021, we collected 97.7% of rents due to us from our net lease tenants.
As a result of the COVID-19 pandemic, some of our tenants have requested rent assistance. During the three months ended March 31, 2021, we entered into rent deferral agreements for $1,228 of rent with five net lease tenants. As of March 31, 2021, we had $10,605 of deferred rents outstanding related to 45 tenants who represent approximately 2.8% of our annualized rental income of our net lease retail portfolio as of March 31, 2021. These deferred rents are included in other assets, net in our condensed consolidated balance sheets. These tenants are obligated to pay, in most cases, the deferred rent over a 12 months - 24 months period. We have elected to use the FASB relief package regarding the application of lease accounting guidance to lease concessions provided as a result of the COVID-19 pandemic. The FASB relief package provides entities with the option to account for lease concessions resulting from the COVID-19 pandemic outside of the existing lease modification guidance if the resulting cash flows from the modified lease are substantially the same as or less than the original lease. Because the deferred rent amounts referenced above will be repaid, the cash flows from the respective leases are substantially the same as before the rent deferrals. The deferred amounts did not impact our operating results for the three months ended March 31, 2021.
We continually review receivables related to rent, straight-line rent and property operating expense reimbursements and determine collectability by taking into consideration the tenant’s payment history, the financial condition of the tenant, business conditions in the industry in which the tenant operates and economic conditions in the area in which the property is located. The review includes an assessment of whether substantially all of the amounts due under a tenant’s lease are probable of collection. For leases that are deemed probable of collection, revenue continues to be recorded on a straight-line basis over the lease term. For leases that are deemed not probable of collection, revenue is recorded as cash is received. We recognize all changes in the collectability assessment for an operating lease as an adjustment to rental income. We recorded reserves for uncollectible amounts against rental income of $4,785 and $1,115 for the three months ended March 31, 2021 and 2020, respectively. We had reserves for uncollectible rents of $23,051 and $18,230 as of March 31, 2021 and December 31, 2020, respectively, included in other assets in our condensed consolidated balance sheets.
SERVICE PROPERTIES TRUST
Notes to Condensed Consolidated Financial Statements
(dollars in thousands, except share data)
(Unaudited)
TA is our largest tenant, leasing 26.7% of our gross carrying value or real estate properties as of March 31, 2021. We leased to TA a total of 179 travel centers under five leases that expire between 2029 and 2035, subject to TA’s right to extend those leases, and require annual minimum rents of $246,110 as of March 31, 2021. In addition, TA is required to pay us previously deferred rent obligations in quarterly installments of $4,404 through January 31, 2023. TA paid $4,404 of deferred rent to us for each of the three months ended March 31, 2021 and 2020. The remaining balance of previously deferred rents was $35,228 as of March 31, 2021.
We recognized rental income from TA of $62,077 and $61,528 for the three months ended March 31, 2021 and 2020, respectively. Rental income for the three months ended March 31, 2021 and 2020 was reduced by $3,305 and $3,344 respectively, to record the deferred rent obligations under our TA leases and the estimated future payments to us by TA for the cost of removing underground storage tanks on a straight-line basis. As of March 31, 2021 and December 31, 2020, we had receivables for current rent amounts owed to us by TA and straight-line rent adjustments of $52,620 and $55,530, respectively. These amounts are included in due from related persons in our condensed consolidated balance sheets.
In addition to the rental income that we recognized during the three months ended March 31, 2021 and 2020 as described above, our TA leases require TA to pay us percentage rent based upon increases in certain sales. We determine percentage rent due under our TA leases annually and recognize any resulting amount as rental income when all contingencies are met. We had aggregate deferred percentage rent under our TA leases of $1,386 and $725 for the three months ended March 31, 2021 and 2020, respectively.
Our TA leases do not require FF&E escrow deposits. However, TA is required to maintain the leased travel centers, including structural and non-structural components. Under our TA leases, TA may request that we fund capital improvements in return for increases in TA’s annual minimum rent equal to 8.5% of the amounts funded. We did not fund any capital improvements to our properties that we leased to TA during the three months ended March 31, 2021 or 2020.
See Note 9 for further information regarding our relationship with TA.
Our other net lease agreements generally provide for minimum rent payments and in addition may include variable payments. Rental income from operating leases, including any payments derived by index or market-based indices, is recognized on a straight-line basis over the lease term when we have determined that the collectability of substantially all of the lease payments is probable. Some of our leases have options to extend or terminate the lease exercisable at the option of our tenants, which are considered when determining the lease term. We recognized rental income from our net lease properties (excluding TA) of $29,645 and $36,653 for the three months ended March 31, 2021 and 2020, respectively, which included $1,422 and $1,701, respectively, of adjustments to record scheduled rent changes under certain of our leases on a straight-line basis.
Note 6. Indebtedness
Our principal debt obligations at March 31, 2021 were: (1) $1,000,000 of outstanding borrowings under our $1,000,000 revolving credit facility; and (2) $6,200,000 aggregate outstanding principal amount of senior unsecured notes. Our revolving credit facility is governed by a credit agreement with a syndicate of institutional lenders.
The maturity date of our revolving credit facility is July 15, 2022, and, subject to the payment of an extension fee and meeting certain other conditions, we have an option to extend the maturity date of the facility for two additional six-month periods. We can borrow, repay and reborrow funds available under our revolving credit facility until maturity, and no principal repayment is due until maturity. We are required to pay interest on borrowings under our revolving credit facility at the rate of LIBOR plus a premium, which was 235 basis points per annum, subject to a LIBOR floor of 0.50%, as of March 31, 2021. We also pay a facility fee, which was 30 basis points per annum at March 31, 2021, on the total amount of lending commitments under our revolving credit facility. Both the interest rate premium and the facility fee are subject to adjustment based upon changes to our credit ratings. As of March 31, 2021, the annual interest rate payable on borrowings under our revolving credit facility was 2.85%. The weighted average annual interest rate for borrowings under our revolving credit facility was 2.85% and 2.60% for the three months ended March 31, 2021 and 2020, respectively. As of each of March 31, 2021 and May 6, 2021, our $1,000,000 revolving credit facility was fully drawn.
SERVICE PROPERTIES TRUST
Notes to Condensed Consolidated Financial Statements
(dollars in thousands, except share data)
(Unaudited)
We and our lenders amended our credit agreement governing our $1,000,000 revolving credit facility in 2020. Among other things, the amendments waived all of the then existing financial covenants through the end of the agreement term, or July 15, 2022, or the Waiver Period. As a result of the amendments, among other things:
•we pledged certain equity interests of subsidiaries owning properties and will provide first mortgage liens on 74 properties owned by certain of the pledged subsidiaries with an undepreciated book value of $1,835,000 as of March 31, 2021 to secure our obligations under the credit agreement;
•we have the ability to fund up to $250,000 of capital expenditures per year and up to $50,000 of certain other investments per year as defined in the credit agreement;
•we agreed to certain covenants and restrictions on distributions to common shareholders, share repurchases, incurring indebtedness, and acquiring real property (in each case subject to various exceptions);
•we agreed to maintain minimum liquidity of $125,000;
•we are generally required to apply the net cash proceeds from the disposition of assets, capital markets transactions and debt refinancings to repay outstanding amounts under the credit agreement, and then to other debt maturities; and
•we may not, during the Waiver Period and until we demonstrate compliance with certain covenants, utilize the feature in our credit agreement pursuant to which maximum aggregate borrowings may be increased to up to $2,300,000 on a combined basis in certain circumstances.
Our credit agreement and our unsecured senior notes indentures and their supplements provide for acceleration of payment of all amounts outstanding upon the occurrence and continuation of certain events of default, such as, in the case of our credit agreement, a change of control of us, which includes The RMR Group LLC, or RMR LLC, ceasing to act as our business manager. Our credit agreement and our unsecured senior notes indentures and their supplements also contain covenants, including those that restrict our ability to incur debts or to make distributions under certain circumstances and generally require us to maintain certain financial ratios. As of March 31, 2021, we were not in compliance with one of our debt covenants necessary to incur additional debt, and as a result, we will not be able to incur additional debt until we meet the required covenant level.
Note 7. Shareholders' Equity
Distributions
During the three months ended March 31, 2021, we declared and paid regular quarterly distributions to common shareholders as follows:
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Declaration Date
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Record Date
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Paid Date
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Dividend Per Common Share
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Total Distributions
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January 14, 2021
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January 25, 2021
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February 18, 2021
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$0.01
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$1,648
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On April 15, 2021, we declared a regular quarterly distribution to common shareholders of record on April 26, 2021 of $0.01 per share, or $1,648. We expect to pay this amount on or about May 20, 2021.
Note 8. Business and Property Management Agreements with RMR LLC
We have no employees. The personnel and various services we require to operate our business are provided to us by RMR LLC. We have two agreements with RMR LLC to provide management services to us: (1) a business management agreement, which relates to our business generally, and (2) a property management agreement, which relates to our property level operations of our net lease portfolio, excluding properties leased to TA, and the office building component of one of our hotels. RMR also provides certain construction supervision services at our hotels managed by Sonesta.
We recognized net business management fees payable to RMR LLC of $10,299 and $10,560 for the three months ended March 31, 2021 and 2020, respectively. Based on our common share total return, as defined in our business management agreement, as of each of March 31, 2021 and 2020, no incentive fees are included in the net business management fees we
SERVICE PROPERTIES TRUST
Notes to Condensed Consolidated Financial Statements
(dollars in thousands, except share data)
(Unaudited)
recognized for the three months ended March 31, 2021 or 2020. The actual amount of annual incentive fees for 2021, if any, will be based on our common share total return, as defined in our business management agreement, for the three-year period ending December 31, 2021, and will be payable in 2022. We did not incur an incentive fee payable to RMR LLC for the year ended December 31, 2020. We include business management fee amounts in general and administrative expenses in our condensed consolidated statements of income (loss).
We recognized property management and construction supervision fees payable to RMR LLC of $804 and $1,032 for the three months ended March 31, 2021 and 2020, respectively. Of those amounts, for the three months ended March 31, 2021 and 2020, $802 and $1,016, respectively, of property management fees were expensed to other operating expenses in our condensed consolidated statements of income (loss) and $2 and $16, respectively, of construction and supervision fees were capitalized and included in building, improvements and equipment in our condensed consolidated balance sheets.
We are generally responsible for all our operating expenses, including certain expenses incurred or arranged by RMR LLC on our behalf. We are generally not responsible for payment of RMR LLC’s employment, office or administrative expenses incurred to provide management services to us, except for the applicable employment and related expenses of RMR LLC employees assigned to work exclusively or partly at our net lease properties (excluding properties leased to TA) and the office building component of one of our hotels, our share of the wages, benefits and other related costs of RMR LLC's centralized accounting personnel, our share of RMR LLC’s costs for providing our internal audit function, and as otherwise agreed. We reimbursed RMR LLC $744 and $543 for these expenses and costs for the three months ended March 31, 2021 and 2020, respectively. We included these amounts in other operating expenses and selling, general and administrative expenses, as applicable, in our condensed consolidated statements of income (loss).
Note 9. Related Person Transactions
We have relationships and historical and continuing transactions with TA, Sonesta, RMR LLC, The RMR Group, Inc., or RMR Inc., and others related to them, including other companies to which RMR LLC or its subsidiaries provide management services and some of which have trustees, directors or officers who are also our Trustees or officers. RMR LLC is a majority owned operating subsidiary of RMR Inc. The Chair of our Board of Trustees and one of our Managing Trustees, Adam D. Portnoy, is the sole trustee, an officer and the controlling shareholder of ABP Trust, which is the controlling shareholder of RMR Inc., a managing director and the president and chief executive officer of RMR Inc. and an officer and employee of RMR LLC. John G. Murray, our other Managing Trustee and our President and Chief Executive Officer also serves as an officer and employee of RMR LLC. In addition, each of our other officers serves as an officer of RMR LLC. Some of our Independent Trustees also serve as independent trustees or independent directors of other public companies to which RMR LLC or its subsidiaries provide management services. Adam Portnoy serves as chair of the boards of trustees or boards of directors of several of these public companies and as a managing director or managing trustee of these public companies. Other officers of RMR LLC, including Mr. Murray and certain of our other officers, serve as managing trustees, managing directors or officers of certain of these companies.
TA. We lease 179 of our travel centers to TA under our TA leases. As of March 31, 2021, we owned 1,184,797 shares of TA common stock, representing approximately 8.1% of TA’s outstanding shares of common stock. RMR LLC provides management services to both us and TA, and Adam D. Portnoy, also serves as the chair of the board of directors and as a managing director of TA and, as of March 31, 2021, beneficially owned 655,505 shares of TA common stock (including through RMR LLC), representing approximately 4.5% of TA’s outstanding shares of common stock. See Note 5 for further information regarding our relationships, agreements and transactions with TA and Note 12 for further information regarding our investment in TA.
Sonesta. Sonesta is a private company that is controlled by one of our Managing Trustees, Adam D. Portnoy. Mr. Portnoy is the largest owner and a director of Sonesta. One of Sonesta’s other directors is our other Managing Trustee, President and Chief Executive Officer and Sonesta’s other director serves as RMR LLC’s and RMR Inc.’s executive vice president, general counsel and secretary and as our Secretary. Sonesta’s chief executive officer and chief financial officer are officers of RMR LLC. Certain other officers and employees of Sonesta are former employees of RMR LLC. RMR LLC also provides certain services to Sonesta. As of March 31, 2021, we owned approximately 34% of Sonesta which managed 256 of our hotels. See Note 5 for further information regarding our relationships, agreements and transactions with Sonesta.
Our Manager, RMR LLC. We have two agreements with RMR LLC to provide management services to us. See Note 8 for further information regarding our management agreements with RMR LLC.
SERVICE PROPERTIES TRUST
Notes to Condensed Consolidated Financial Statements
(dollars in thousands, except share data)
(Unaudited)
For further information about these and certain other such relationships and certain other related person transactions, refer to our 2020 Annual Report.
Note 10. Income Taxes
We have elected to be taxed as a REIT under the United States Internal Revenue Code of 1986, as amended, or the IRC, and, as such, are generally not subject to federal and most state income taxation on our operating income provided we distribute our taxable income to our shareholders and meet certain organization and operating requirements. We are subject to income tax in Canada, Puerto Rico and certain states despite our qualification for taxation as a REIT. Further, we lease our managed hotels to our wholly owned TRSs that, unlike most of our subsidiaries, file a separate consolidated tax return and are subject to federal, state and foreign income taxes. Our consolidated income tax provision includes the income tax provision related to the operations of our TRSs and certain state and foreign income taxes incurred by us despite our qualification for taxation as a REIT.
During the three months ended March 31, 2021, we recognized income tax expense of $853, which includes $100 of foreign taxes and $753 of state taxes. During the three months ended March 31, 2020, we recognized income tax expense of $342 which includes $51 of foreign taxes and $291 of state taxes.
Note 11. Segment Information
We aggregate our hotels and net lease portfolio into two reportable segments, hotel investments and net lease investments, based on their similar operating and economic characteristics.
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For the Three Months Ended March 31, 2021
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Hotels
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Net Lease
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Corporate
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Consolidated
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Revenues:
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Hotel operating revenues
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$
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168,953
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$
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—
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$
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—
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$
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168,953
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Rental income
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496
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|
|
91,721
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—
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|
|
92,217
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Total revenues
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169,449
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|
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91,721
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—
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|
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261,170
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Expenses:
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Hotel operating expenses
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214,987
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—
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—
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214,987
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Other operating expenses
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—
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|
3,417
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—
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|
|
3,417
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Depreciation and amortization
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68,124
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56,244
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|
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—
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124,368
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General and administrative
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—
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—
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12,657
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12,657
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Loss on asset impairment
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—
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|
1,211
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|
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—
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|
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1,211
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Total expenses
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283,111
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|
|
60,872
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|
|
12,657
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356,640
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Loss on sale of real estate
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—
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(9)
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—
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(9)
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Unrealized losses on equity securities
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—
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—
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(6,481)
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(6,481)
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Interest income
|
|
—
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|
|
—
|
|
|
57
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|
|
57
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|
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Interest expense
|
|
—
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|
|
—
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|
|
(89,391)
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|
|
(89,391)
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Income (loss) before income taxes and equity in earnings of an investee
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(113,662)
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|
30,840
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(108,472)
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|
(191,294)
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Income tax expense
|
|
—
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|
|
—
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|
|
(853)
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|
|
(853)
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Equity in losses of an investee
|
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—
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|
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—
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(2,843)
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|
(2,843)
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|
Net income (loss)
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|
$
|
(113,662)
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|
|
$
|
30,840
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|
|
$
|
(112,168)
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|
$
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(194,990)
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As of March 31, 2021
|
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|
|
Hotels
|
|
Net Lease
|
|
Corporate
|
|
Consolidated
|
|
Total assets
|
|
$
|
4,832,229
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|
|
$
|
3,766,306
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|
|
$
|
915,980
|
|
|
$
|
9,514,515
|
|
SERVICE PROPERTIES TRUST
Notes to Condensed Consolidated Financial Statements
(dollars in thousands, except share data)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended March 31, 2020
|
|
|
|
Hotels
|
|
Net Lease
|
|
Corporate
|
|
Consolidated
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
Hotel operating revenues
|
|
$
|
383,503
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
383,503
|
|
|
Rental income
|
|
1,008
|
|
|
99,265
|
|
|
—
|
|
|
100,273
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues
|
|
384,511
|
|
|
99,265
|
|
|
—
|
|
|
483,776
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
Hotel operating expenses
|
|
271,148
|
|
|
—
|
|
|
—
|
|
|
271,148
|
|
|
Other operating expenses
|
|
—
|
|
|
3,759
|
|
|
—
|
|
|
3,759
|
|
|
Depreciation and amortization
|
|
67,669
|
|
|
60,257
|
|
|
—
|
|
|
127,926
|
|
|
General and administrative
|
|
—
|
|
|
—
|
|
|
14,024
|
|
|
14,024
|
|
|
Loss on asset impairment
|
|
—
|
|
|
16,740
|
|
|
—
|
|
|
16,740
|
|
|
Total expenses
|
|
338,817
|
|
|
80,756
|
|
|
14,024
|
|
|
433,597
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain on sale of real estate
|
|
—
|
|
|
(6,911)
|
|
|
—
|
|
|
(6,911)
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized losses on equity securities
|
|
—
|
|
|
—
|
|
|
(5,045)
|
|
|
(5,045)
|
|
|
Interest income
|
|
147
|
|
|
—
|
|
|
115
|
|
|
262
|
|
|
Interest expense
|
|
—
|
|
|
—
|
|
|
(71,075)
|
|
|
(71,075)
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income taxes and equity in earnings of an investee
|
|
45,841
|
|
|
11,598
|
|
|
(90,029)
|
|
|
(32,590)
|
|
|
Income tax expense
|
|
—
|
|
|
—
|
|
|
(342)
|
|
|
(342)
|
|
|
Equity in losses of an investee
|
|
—
|
|
|
—
|
|
|
(718)
|
|
|
(718)
|
|
|
Net income (loss)
|
|
$
|
45,841
|
|
|
$
|
11,598
|
|
|
$
|
(91,089)
|
|
|
$
|
(33,650)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of December 31, 2020
|
|
|
|
Hotels
|
|
Net Lease
|
|
Corporate
|
|
Consolidated
|
|
Total assets
|
|
$
|
4,846,410
|
|
|
$
|
3,721,418
|
|
|
$
|
119,491
|
|
|
$
|
8,687,319
|
|
Note 12. Fair Value of Assets and Liabilities
The table below presents certain of our assets carried at fair value at March 31, 2021, categorized by the level of inputs, as defined in the fair value hierarchy under GAAP, used in the valuation of each asset.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2021
|
|
December 31, 2020
|
|
|
|
Carrying Value
|
|
Fair Value
|
|
Carrying Value
|
|
Fair Value
|
|
Recurring Fair Value Measurement Assets:
|
|
|
|
|
|
|
|
|
|
Investment in TA (Level 1) (1)
|
|
$
|
32,143
|
|
|
$
|
32,144
|
|
|
$
|
38,624
|
|
|
$
|
38,624
|
|
|
Non-Recurring Fair Value Measurement Assets:
|
|
|
|
|
|
|
|
|
|
Assets of properties held for sale (Level 2) (2)
|
|
$
|
13,805
|
|
|
$
|
13,805
|
|
|
$
|
13,543
|
|
|
$
|
13,543
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)As of March 31, 2021 and December 31, 2020, we owned 1,184,797 shares of TA common stock, which are included in other assets in our condensed consolidated balance sheets and reported at fair value based on quoted market prices (Level 1 inputs). Our historical cost basis for these shares was $24,418 as of both March 31, 2021 and December 31, 2020. During the three months ended March 31, 2021 we recorded unrealized losses of $6,481 to adjust the carrying value of our investment in TA shares to their fair values.
(2)As of March 31, 2021, we owned five hotels in four states with an aggregate carrying value of $10,699 and six net lease properties located in four states with an aggregate carrying value of $3,106 classified as held for sale. These properties are recorded at their estimated fair value less costs to sell based on information derived from offers received from prospective buyers of the properties (Level 2 inputs as defined in the fair value hierarchy under GAAP). We recorded a $1,211 loss on asset impairment during the three months ended March 31, 2021 to reduce the carrying value of two of these properties to their estimated fair value less costs to sell. As of December 31, 2020, we owned five hotels in four states with an aggregate carrying value of $10,699 and six net lease properties located in six states with an aggregate carrying value of $2,844 classified as held for sale.
In addition to the assets included in the table above, our financial instruments include our cash and cash equivalents, restricted cash, rents receivable, revolving credit facility and senior notes. At March 31, 2021 and December 31, 2020, the fair values of these additional financial instruments approximated their carrying values in our condensed consolidated balance sheets due to their short-term nature or floating interest rates, except as follows:
SERVICE PROPERTIES TRUST
Notes to Condensed Consolidated Financial Statements
(dollars in thousands, except share data)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2021
|
|
December 31, 2020
|
|
|
|
Carrying Value (1)
|
|
Fair Value
|
|
Carrying Value (1)
|
|
Fair Value
|
|
Senior Unsecured Notes, due 2022 at 5.00%
|
|
498,335
|
|
|
509,578
|
|
|
498,032
|
|
|
510,285
|
|
|
Senior Unsecured Notes, due 2023 at 4.50%
|
|
499,637
|
|
|
509,858
|
|
|
499,596
|
|
|
505,280
|
|
|
Senior Unsecured Notes, due 2024 at 4.65%
|
|
348,801
|
|
|
350,432
|
|
|
348,700
|
|
|
347,893
|
|
|
Senior Unsecured Notes, due 2024 at 4.35%
|
|
819,913
|
|
|
821,985
|
|
|
819,546
|
|
|
819,328
|
|
|
Senior Unsecured Notes, due 2025 at 4.50%
|
|
347,290
|
|
|
345,725
|
|
|
347,118
|
|
|
346,462
|
|
|
Senior Unsecured Notes, due 2025 at 7.50%
|
|
789,590
|
|
|
910,616
|
|
|
789,006
|
|
|
926,404
|
|
|
Senior Unsecured Notes, due 2026 at 5.25%
|
|
344,495
|
|
|
354,715
|
|
|
344,212
|
|
|
354,996
|
|
|
Senior Unsecured Notes, due 2026 at 4.75%
|
|
446,668
|
|
|
426,434
|
|
|
446,515
|
|
|
448,506
|
|
|
Senior Unsecured Notes, due 2027 at 4.95%
|
|
395,594
|
|
|
395,262
|
|
|
395,405
|
|
|
404,328
|
|
|
Senior Unsecured Notes, due 2027 at 5.50%
|
|
442,620
|
|
|
474,766
|
|
|
442,370
|
|
|
491,918
|
|
|
Senior Unsecured Notes, due 2028 at 3.95%
|
|
392,195
|
|
|
367,578
|
|
|
391,908
|
|
|
388,146
|
|
|
Senior Unsecured Notes, due 2029 at 4.95%
|
|
418,300
|
|
|
408,179
|
|
|
418,102
|
|
|
430,064
|
|
|
Senior Unsecured Notes, due 2030 at 4.375%
|
|
389,938
|
|
|
366,950
|
|
|
389,656
|
|
|
388,292
|
|
|
Total financial liabilities
|
|
$
|
6,133,376
|
|
|
$
|
6,242,078
|
|
|
$
|
6,130,166
|
|
|
$
|
6,361,902
|
|
(1)Carrying value includes unamortized discounts and premiums and issuance costs.
At March 31, 2021 and December 31, 2020, we estimated the fair values of our senior notes using an average of the bid and ask price of our then outstanding issuances of senior notes (Level 2 inputs).