UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
☒ |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended March 31, 2022
OR
☐ |
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 001-37795
Park Hotels & Resorts Inc.
(Exact name of Registrant as specified in its Charter)
Delaware |
|
36-2058176 |
(State or other jurisdiction of incorporation or organization) |
|
(I.R.S Employer Identification No.) |
1775 Tysons Boulevard, 7th Floor, Tysons, VA |
|
22102 |
(Address of principal executive offices) |
|
(Zip Code) |
(Registrant’s telephone number, including area code): (571) 302-5757
Securities registered pursuant to Section 12(b) of the Act.
Title of each class |
Trading Symbol |
Name of exchange on which registered |
Common Stock, $0.01 par value per share |
PK |
New York Stock Exchange |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Sections 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 every Interactive Data File required to be submitted 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 such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a 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.
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 ☒
The number of shares of common stock outstanding on April 27, 2022 was 233,370,080.
Table of Contents
PART I. FINANCIAL INFORMATION |
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Page |
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Item 1. |
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3 |
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Condensed Consolidated Balance Sheets as of March 31, 2022 and December 31, 2021 |
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3 |
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Condensed Consolidated Statements of Comprehensive Loss for the Three Months Ended March 31, 2022 and 2021 |
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4 |
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Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2022 and 2021 |
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5 |
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Condensed Consolidated Statements of Equity for the Three Months Ended March 31, 2022 and 2021 |
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6 |
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7 |
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Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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14 |
Item 3. |
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23 |
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Item 4. |
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23 |
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PART II. OTHER INFORMATION |
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Item 1. |
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24 |
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Item 1A. |
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24 |
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Item 2. |
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24 |
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Item 3. |
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24 |
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Item 4. |
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24 |
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Item 5. |
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25 |
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Item 6. |
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26 |
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27 |
2
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
PARK HOTELS & RESORTS INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in millions, except share and per share data)
Refer to the notes to the unaudited condensed consolidated financial statements.
3
PARK HOTELS & RESORTS INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(unaudited, in millions, except per share data)
|
|
Three Months Ended March 31, |
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|||||
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2022 |
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2021 |
|
||
Revenues |
|
|
|
|
|
|
||
Rooms |
|
$ |
292 |
|
|
$ |
106 |
|
Food and beverage |
|
|
110 |
|
|
|
22 |
|
Ancillary hotel |
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61 |
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|
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29 |
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Other |
|
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16 |
|
|
|
8 |
|
Total revenues |
|
|
479 |
|
|
|
165 |
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|
|
|
|
|
|
|
||
Operating expenses |
|
|
|
|
|
|
||
Rooms |
|
|
85 |
|
|
|
35 |
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Food and beverage |
|
|
87 |
|
|
|
21 |
|
Other departmental and support |
|
|
133 |
|
|
|
78 |
|
Other property-level |
|
|
50 |
|
|
|
48 |
|
Management fees |
|
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22 |
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|
|
7 |
|
Depreciation and amortization |
|
|
69 |
|
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|
74 |
|
Corporate general and administrative |
|
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16 |
|
|
|
18 |
|
Other |
|
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16 |
|
|
|
7 |
|
Total expenses |
|
|
478 |
|
|
|
288 |
|
|
|
|
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|
|
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||
Operating income (loss) |
|
|
1 |
|
|
|
(123 |
) |
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|
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||
Interest expense |
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|
(62 |
) |
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|
(63 |
) |
Equity in losses from investments in affiliates |
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|
— |
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|
|
(4 |
) |
Other gain, net |
|
|
5 |
|
|
|
— |
|
|
|
|
|
|
|
|
||
Loss before income taxes |
|
|
(56 |
) |
|
|
(190 |
) |
Income tax expense |
|
|
— |
|
|
|
(1 |
) |
Net loss |
|
|
(56 |
) |
|
|
(191 |
) |
Net (income) loss attributable to noncontrolling interests |
|
|
(1 |
) |
|
|
1 |
|
Net loss attributable to stockholders |
|
$ |
(57 |
) |
|
$ |
(190 |
) |
|
|
|
|
|
|
|
||
Other comprehensive income, net of tax expense: |
|
|
|
|
|
|
||
Change in fair value of interest rate swap, net of tax expense of $0 |
|
|
— |
|
|
|
1 |
|
Total other comprehensive income |
|
|
— |
|
|
|
1 |
|
|
|
|
|
|
|
|
||
Comprehensive loss |
|
|
(56 |
) |
|
|
(190 |
) |
Comprehensive (income) loss attributable to noncontrolling interests |
|
|
(1 |
) |
|
|
1 |
|
Comprehensive loss attributable to stockholders |
|
$ |
(57 |
) |
|
$ |
(189 |
) |
|
|
|
|
|
|
|
||
Loss per share: |
|
|
|
|
|
|
||
Loss per share – Basic |
|
$ |
(0.24 |
) |
|
$ |
(0.81 |
) |
Loss per share – Diluted |
|
$ |
(0.24 |
) |
|
$ |
(0.81 |
) |
|
|
|
|
|
|
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||
Weighted average shares outstanding – Basic |
|
|
235 |
|
|
|
235 |
|
Weighted average shares outstanding – Diluted |
|
|
235 |
|
|
|
236 |
|
Refer to the notes to the unaudited condensed consolidated financial statements.
4
PARK HOTELS & RESORTS INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited, in millions)
|
|
Three Months Ended |
|
|||||
|
|
March 31, |
|
|||||
|
|
2022 |
|
|
2021 |
|
||
Operating Activities: |
|
|
|
|
|
|
||
Net loss |
|
$ |
(56 |
) |
|
$ |
(191 |
) |
Adjustments to reconcile net loss to net cash provided by (used in) operating |
|
|
|
|
|
|
||
Depreciation and amortization |
|
|
69 |
|
|
|
74 |
|
Equity in losses from investments in affiliates |
|
|
— |
|
|
|
4 |
|
Other gain, net |
|
|
(1 |
) |
|
|
— |
|
Share-based compensation expense |
|
|
4 |
|
|
|
6 |
|
Amortization of deferred financing costs |
|
|
3 |
|
|
|
2 |
|
Changes in operating assets and liabilities |
|
|
25 |
|
|
|
34 |
|
Net cash provided by (used in) operating activities |
|
|
44 |
|
|
|
(71 |
) |
Investing Activities: |
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|
||
Capital expenditures for property and equipment |
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|
(21 |
) |
|
|
(5 |
) |
Contributions to unconsolidated affiliates |
|
|
— |
|
|
|
(2 |
) |
Insurance proceeds for property damage claims |
|
|
— |
|
|
|
4 |
|
Net cash used in investing activities |
|
|
(21 |
) |
|
|
(3 |
) |
Financing Activities: |
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||
Repayments of mortgage debt |
|
|
(2 |
) |
|
|
(1 |
) |
Debt issuance costs |
|
|
(3 |
) |
|
|
— |
|
Tax withholdings on share-based compensation |
|
|
(3 |
) |
|
|
(6 |
) |
Repurchase of common stock |
|
|
(61 |
) |
|
|
— |
|
Net cash used in financing activities |
|
|
(69 |
) |
|
|
(7 |
) |
Net decrease in cash and cash equivalents and restricted cash |
|
|
(46 |
) |
|
|
(81 |
) |
Cash and cash equivalents and restricted cash, beginning of period |
|
|
763 |
|
|
|
981 |
|
Cash and cash equivalents and restricted cash, end of period |
|
$ |
717 |
|
|
$ |
900 |
|
|
|
|
|
|
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||
Supplemental Disclosures |
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|
|
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||
Non-cash financing activities: |
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|
|
|
|
|
||
Dividends declared but unpaid |
|
$ |
2 |
|
|
$ |
— |
|
Refer to the notes to the unaudited condensed consolidated financial statements.
5
PARK HOTELS & RESORTS INC.
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
(unaudited, in millions)
|
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|||||||
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Additional |
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Non- |
|
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|
|
|
|||||||
|
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Common Stock |
|
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Paid-in |
|
|
Accumulated |
|
|
controlling |
|
|
|
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|
||||||||||
|
|
Shares |
|
|
Amount |
|
|
Capital |
|
|
Deficit |
|
|
Interests |
|
|
Total |
|
|
|
|
|||||||
Balance as of December 31, 2021 |
|
|
236 |
|
|
$ |
2 |
|
|
$ |
4,533 |
|
|
$ |
(83 |
) |
|
$ |
(49 |
) |
|
$ |
4,403 |
|
|
|
|
|
Share-based compensation, net |
|
|
— |
|
|
|
— |
|
|
|
1 |
|
|
|
— |
|
|
|
— |
|
|
|
1 |
|
|
|
|
|
Net loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(57 |
) |
|
|
1 |
|
|
|
(56 |
) |
|
|
|
|
Dividends and dividend equivalents(1) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(2 |
) |
|
|
— |
|
|
|
(2 |
) |
|
|
|
|
Repurchase of common stock |
|
|
(3 |
) |
|
|
— |
|
|
|
(61 |
) |
|
|
— |
|
|
|
— |
|
|
|
(61 |
) |
|
|
|
|
Balance as of March 31, 2022 |
|
|
233 |
|
|
$ |
2 |
|
|
$ |
4,473 |
|
|
$ |
(142 |
) |
|
$ |
(48 |
) |
|
$ |
4,285 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
Retained |
|
|
Accumulated |
|
|
|
|
|
|
|
|||||||
|
|
|
|
|
|
|
|
Additional |
|
|
Earnings |
|
|
Other |
|
|
Non- |
|
|
|
|
|||||||
|
|
Common Stock |
|
|
Paid-in |
|
|
(Accumulated |
|
|
Comprehensive |
|
|
controlling |
|
|
|
|
||||||||||
|
|
Shares |
|
|
Amount |
|
|
Capital |
|
|
Deficit) |
|
|
(Loss) Income |
|
|
Interests |
|
|
Total |
|
|||||||
Balance as of December 31, 2020 |
|
|
236 |
|
|
$ |
2 |
|
|
$ |
4,519 |
|
|
$ |
376 |
|
|
$ |
(4 |
) |
|
$ |
(50 |
) |
|
$ |
4,843 |
|
Share-based compensation, net |
|
|
— |
|
|
|
— |
|
|
|
1 |
|
|
|
(1 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
Net loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(190 |
) |
|
|
— |
|
|
|
(1 |
) |
|
|
(191 |
) |
Other comprehensive income |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1 |
|
|
|
— |
|
|
|
1 |
|
Balance as of March 31, 2021 |
|
|
236 |
|
|
$ |
2 |
|
|
$ |
4,520 |
|
|
$ |
185 |
|
|
$ |
(3 |
) |
|
$ |
(51 |
) |
|
$ |
4,653 |
|
(1) Dividends declared per common share were $0.01 for the three months ended March 31, 2022.
Refer to the notes to the unaudited condensed consolidated financial statements.
6
PARK HOTELS & RESORTS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Note 1: Organization and Recent Events
Organization
Park Hotels & Resorts Inc. (“we,” “us,” “our” or the “Company” and, exclusive of any subsidiaries, "Park Parent") is a Delaware corporation that owns a portfolio of premium-branded hotels and resorts primarily located in prime city center and resort locations. On January 3, 2017, Hilton Worldwide Holdings Inc. (“Hilton”) completed the spin-off of a portfolio of hotels and resorts that established Park Hotels & Resorts Inc. as an independent, publicly traded company.
On May 5, 2019, the Company, PK Domestic Property LLC, an indirect subsidiary of the Company (“PK Domestic”), and PK Domestic Sub LLC, a wholly-owned subsidiary of PK Domestic (“Merger Sub”) entered into a definitive Agreement and Plan of Merger (the “Merger Agreement”) with Chesapeake Lodging Trust (“Chesapeake”). On September 18, 2019, pursuant to the terms and subject to the conditions set forth in the Merger Agreement, Chesapeake merged with and into Merger Sub (the “Merger”) and each of Chesapeake’s common shares of beneficial interest, $0.01 par value per share, was converted into $11.00 in cash and 0.628 of a share of our common stock. No fractional shares of our common stock were issued in the Merger. The value of any fractional interests to which a Chesapeake shareholder would otherwise have been entitled was paid in cash.
We are a real estate investment trust (“REIT”) for United States (“U.S.”) federal income tax purposes. We have been organized and operated, and we expect to continue to be organized and operate, in a manner to qualify as a REIT. To qualify as a REIT, we must satisfy requirements related to, among other things, the real estate qualification of sources of our income, the real estate composition and values of our assets, the amounts we distribute to our stockholders annually and the diversity of ownership of our stock. From the date of our spin-off from Hilton, Park Intermediate Holdings LLC (our “Operating Company”), directly or indirectly, has held all our assets and has conducted all of our operations. Park Parent owned 100% of the interests in our Operating Company until December 31, 2021 when the business undertook an internal reorganization transitioning our structure to a traditional umbrella partnership REIT structure ("UPREIT"). Effective January 1, 2022, Park Parent became the managing member of our Operating Company and PK Domestic REIT Inc., a direct subsidiary of Park Parent, became a member. We may, in the future, issue interests in (or from) our Operating Company in connection with acquiring hotels, financing, compensation or other purposes.
COVID-19 Update
The novel strain of coronavirus and the disease it causes (“COVID-19”) have had and continue to have an effect on the hospitality industry and our business. Beginning in March 2020, we experienced a significant decline in occupancy and Revenue per Available Room (“RevPAR”) associated with COVID-19 throughout our portfolio, which resulted in a decline in our operating cash flow. The increase in vaccination rates across the country and the easing or removal of government restrictions, quarantining and “social distancing” mandates resulted in increased travel and hospitality spending beginning in the second quarter of 2021. Although concerns over the spread of the Omicron variant reduced demand in the first six weeks of the quarter, we witnessed recovery beginning in mid-February 2022 as COVID-19 cases declined across the country and business travel accelerated, and saw the return of group demand. We expect positive momentum to continue for our leisure focused hotels and increased demand for both group and business transient travel during the remainder of the year.
Note 2: Basis of Presentation and Summary of Significant Accounting Policies
Basis of Presentation
Principles of Consolidation
The unaudited condensed consolidated financial statements reflect our financial position, results of operations and cash flows, in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”). We have condensed or omitted certain information and footnote disclosures normally included in financial statements presented in accordance with U.S. GAAP. In our opinion, the accompanying unaudited condensed consolidated financial statements reflect all adjustments, including normal recurring items, considered necessary for a fair presentation of the interim periods. All significant intercompany transactions and balances within the financial statements have been eliminated.
These financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto for the year ended December 31, 2021 included in our Annual Report on Form 10-K, filed with the Securities and Exchange Commission (“SEC”) on February 18, 2022.
7
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Interim results are not necessarily indicative of full year performance.
Reclassifications
Certain line items on the condensed consolidated balance sheets as of December 31, 2021 have been reclassified to conform to the current period presentation.
Summary of Significant Accounting Policies
Our Annual Report on Form 10-K for the year ended December 31, 2021, filed with the SEC on February 18, 2022, contains a discussion of the significant accounting policies. There have been no significant changes to our significant accounting policies since December 31, 2021.
Note 3: Property and Equipment
Property and equipment were:
|
|
March 31, 2022 |
|
|
December 31, 2021 |
|
||
|
|
(in millions) |
|
|||||
Land |
|
$ |
3,336 |
|
|
$ |
3,333 |
|
Buildings and leasehold improvements |
|
|
6,616 |
|
|
|
6,606 |
|
Furniture and equipment |
|
|
1,013 |
|
|
|
1,005 |
|
Construction-in-progress |
|
|
82 |
|
|
|
82 |
|
|
|
|
11,047 |
|
|
|
11,026 |
|
Accumulated depreciation and amortization |
|
|
(2,582 |
) |
|
|
(2,515 |
) |
|
|
$ |
8,465 |
|
|
$ |
8,511 |
|
Depreciation of property and equipment was $68 million and $73 million during the three months ended March 31, 2022 and 2021, respectively.
Note 4: Consolidated Variable Interest Entities ("VIEs") and Investments in Affiliates
Consolidated VIEs
We consolidate VIEs that own three hotels in the U.S. We are the primary beneficiary of these VIEs as we have the power to direct the activities that most significantly affect their economic performance. Additionally, we have the obligation to absorb their losses and the right to receive benefits that could be significant to them. The assets of our VIEs are only available to settle the obligations of these entities. Our condensed consolidated balance sheets include the following assets and liabilities of these entities:
|
|
March 31, 2022 |
|
|
December 31, 2021 |
|
||
|
|
(in millions) |
|
|||||
Property and equipment, net |
|
$ |
208 |
|
|
$ |
209 |
|
Cash and cash equivalents |
|
|
19 |
|
|
|
18 |
|
Restricted cash |
|
|
8 |
|
|
|
6 |
|
Accounts receivable, net |
|
|
3 |
|
|
|
3 |
|
Prepaid expenses |
|
|
2 |
|
|
|
1 |
|
Debt |
|
|
206 |
|
|
|
208 |
|
Accounts payable and accrued expenses |
|
|
8 |
|
|
|
7 |
|
Due to hotel manager |
|
|
1 |
|
|
|
1 |
|
Other liabilities |
|
|
4 |
|
|
|
3 |
|
8
Unconsolidated Entities
Investments in affiliates were:
|
|
Ownership % |
|
March 31, 2022 |
|
|
December 31, 2021 |
|
||
|
|
|
|
(in millions) |
|
|||||
Hilton San Diego Bayfront |
|
25% |
|
$ |
12 |
|
|
$ |
11 |
|
All others (5 hotels) |
|
20% - 50% |
|
|
4 |
|
|
|
4 |
|
|
|
|
|
$ |
16 |
|
|
$ |
15 |
|
The affiliates in which we own investments accounted for under the equity method had total debt of approximately $942 million and $943 million as of March 31, 2022 and December 31, 2021, respectively. Substantially all the debt is secured solely by the affiliates’ assets or is guaranteed by other partners without recourse to us.
Note 5: Debt
Debt balances and associated interest rates as of March 31, 2022 were:
|
|
|
|
|
|
Principal balance as of |
|
|||||
|
|
Interest Rate |
|
Maturity Date |
|
March 31, 2022 |
|
|
December 31, 2021 |
|
||
|
|
|
|
|
|
(in millions) |
|
|||||
SF Mortgage Loan(1) |
|
4.11% |
|
November 2023 |
|
$ |
725 |
|
|
$ |
725 |
|
HHV Mortgage Loan(1) |
|
4.20% |
|
November 2026 |
|
|
1,275 |
|
|
|
1,275 |
|
Other mortgage loans |
|
Average rate of 4.22% |
|
2022 to 2027(2) |
|
|
501 |
|
|
|
503 |
|
2019 Term Facility(3) |
|
L + 2.65% |
|
August 2024 |
|
|
78 |
|
|
|
78 |
|
Revolver(3) |
|
L + 3.00% |
|
December 2023 |
|
|
— |
|
|
|
— |
|
2025 Senior Secured Notes(4) |
|
7.50% |
|
June 2025 |
|
|
650 |
|
|
|
650 |
|
2028 Senior Secured Notes(4) |
|
5.88% |
|
October 2028 |
|
|
725 |
|
|
|
725 |
|
2029 Senior Secured Notes(4) |
|
4.88% |
|
May 2029 |
|
|
750 |
|
|
|
750 |
|
|
|
|
|
|
|
|
4,704 |
|
|
|
4,706 |
|
Add: unamortized premium |
|
|
|
|
|
|
4 |
|
|
|
4 |
|
Less: unamortized deferred financing costs and |
|
|
|
|
|
|
(37 |
) |
|
|
(38 |
) |
|
|
|
|
|
|
$ |
4,671 |
|
|
$ |
4,672 |
|
(1) In October 2016, we entered into a $725 million CMBS loan secured by the Hilton San Francisco Union Square and the Parc 55 Hotel San Francisco (“SF Mortgage Loan”) and a $1.275 billion CMBS loan secured by the Hilton Hawaiian Village Waikiki Beach Resort (“HHV Mortgage Loan”).
(2) Assumes the exercise of all extensions that are exercisable solely at our option. The mortgage loan for Hilton Denver City Center matures in 2042 but is callable by the lender with six months of notice. As of March 31, 2022, Park had not received notice from the lender. Additionally, in April 2022, our joint venture refinanced the mortgage loan secured by the DoubleTree Hotel Ontario Airport, which extended the maturity date to May 2027.
(3) In August 2019, the Company, our Operating Company and PK Domestic entered into a term loan facility (the “2019 Term Facility”). In May 2020, we amended our credit and term loan facilities to add a LIBOR floor of 25 basis points. As of March 31, 2022, we had $901 million of available capacity under our revolving credit facility ("Revolver").
(4) In May and September 2020, our Operating Company, PK Domestic and PK Finance issued an aggregate of $650 million of senior secured notes due 2025 (“2025 Senior Secured Notes”) and an aggregate of $725 million of senior secured notes due 2028 (“2028 Senior Secured Notes”), respectively. Additionally, in May 2021, our Operating Company, PK Domestic and PK Finance issued an aggregate of $750
million of senior secured notes due 2029 (“2029 Senior Secured Notes”).
We are required to deposit with lenders certain cash reserves for restricted uses. As of March 31, 2022 and December 31, 2021, our condensed consolidated balance sheets included $63 million and $60 million of restricted cash, respectively, related to our mortgage loans.
Credit Facilities
Revolver and 2019 Term Facility
In February 2022, we amended our credit and term loan facilities to extend the waiver period for the testing of the financial covenants to the date the financial statements are delivered for the quarter ended September 30, 2022 (except for the minimum fixed charge coverage ratio, which waiver period for such covenant will end as of the date the financial statements are delivered for the quarter ended June 30, 2022), in each case, unless we elect an earlier date, and to adjust the required ratio levels of particular financial
9
covenants after such waiver periods. As part of the amendment process, we (i) extended the temporary periods for which calculation of certain financial covenants are annualized once quarterly testing of financial covenants resumes, (ii) extended the minimum liquidity covenant of $200 million through , (iii) obtained the ability to repurchase up to $250 million of shares as long as the Revolver balance is $0 (with the amount of any such repurchases increasing the minimum liquidity covenant, dollar for dollar, resulting in a minimum liquidity covenant amount as of March 31, 2022 of $261 million), (iv) increased the amount of non-recourse debt allowed to be incurred during the waiver period to $500 million from $350 million, (v) obtained the ability during the waiver period to voluntarily prepay certain mortgage debt maturing in 2022 and 2023, (vi) removed the limitation applied during the waiver period on capital expenditures within the portfolio, (vii) increased the ability during the waiver period to acquire investments to $1 billion from $200 million, with an option to expand to $1.5 billion with a corresponding increase of the minimum liquidity covenant to $300 million, and (viii) removed any restrictions on asset sales that applied during the waiver period. In addition, we amended the mandatory prepayment requirements that apply during the waiver period to, among other things, only require mandatory repayments from specified events if and to the extent the Revolver balance exceeds $600 million (and no prepayment of the 2019 Term Facility being required).
Debt Maturities
The contractual maturities of our debt, assuming the exercise of all extensions that are exercisable solely at our option, as of March 31, 2022 were:
Year |
|
(in millions) |
|
|
2022 |
|
$ |
62 |
|
2023 |
|
|
833 |
|
2024 |
|
|
85 |
|
2025 |
|
|
657 |
|
2026 |
|
|
1,562 |
|
Thereafter(1) |
|
|
1,505 |
|
|
|
$ |
4,704 |
|
(1) Assumes the exercise of all extensions that are exercisable solely at our option.
Note 6: Fair Value Measurements
We did not elect the fair value measurement option for our financial assets or liabilities. The fair values of our other financial instruments not included in the table below are estimated to be equal to their carrying amounts.
The fair value of our debt and the hierarchy level we used to estimate fair values are shown below:
|
|
|
|
|
March 31, 2022 |
|
|
December 31, 2021 |
|
|||||||||||
|
|
Hierarchy |
|
|
Carrying |
|
|
Fair Value |
|
|
Carrying |
|
|
Fair Value |
|
|||||
|
|
|
|
|
(in millions) |
|
||||||||||||||
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
SF Mortgage Loan |
|
|
3 |
|
|
$ |
725 |
|
|
$ |
718 |
|
|
$ |
725 |
|
|
$ |
733 |
|
HHV Mortgage Loan |
|
|
3 |
|
|
|
1,275 |
|
|
|
1,218 |
|
|
|
1,275 |
|
|
|
1,282 |
|
2019 Term Facility |
|
|
3 |
|
|
|
78 |
|
|
|
76 |
|
|
|
78 |
|
|
|
76 |
|
2025 Senior Secured Notes |
|
|
1 |
|
|
|
650 |
|
|
|
679 |
|
|
|
650 |
|
|
|
688 |
|
2028 Senior Secured Notes |
|
|
1 |
|
|
|
725 |
|
|
|
727 |
|
|
|
725 |
|
|
|
761 |
|
2029 Senior Secured Notes |
|
|
1 |
|
|
|
750 |
|
|
|
705 |
|
|
|
750 |
|
|
|