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þ
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the fiscal year ended December 31, 2019
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or
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the transition period from to
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Maryland
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46-5765413
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(State of incorporation)
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(I.R.S. Employer Identification No.)
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50 Rockefeller Plaza
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New York, New York
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10020
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(Address of principal executive office)
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(Zip Code)
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Large accelerated filer o
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Accelerated filer o
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Non-accelerated filer o
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Smaller reporting company o
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Emerging growth company þ
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Page
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PART I
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Item 1.
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Item 1A.
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Item 1B.
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Item 2.
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Item 3.
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Item 4.
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PART II
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Item 5.
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Item 6.
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Item 7.
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Item 7A.
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Item 8.
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Item 9.
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Item 9A.
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Item 9B.
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PART III
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Item 10.
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Item 11.
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Item 12.
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Item 13.
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Item 14.
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PART IV
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Item 15.
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Item 16.
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•
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changes in the respective businesses, operations, assets, liabilities, or prospects of CWI 1 and CWI 2;
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•
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changes in general market and economic conditions, and other factors generally affecting the relative values of CWI 1's and CWI 2's assets;
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•
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federal, state and local legislation, governmental regulation, and legal developments in the businesses in which CWI 1 and CWI 2 operate; or
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•
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other factors beyond the control of CWI 1 and CWI 2, including those described or referred to elsewhere in the "Risk Factors" section in the Form S-4.
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•
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vulnerability of the combined company to general adverse economic and industry conditions;
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•
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limiting the combined company's ability to obtain additional financing to fund future working capital, capital expenditures and other general corporate requirements;
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•
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requiring the use of a substantial portion of the combined company's cash flow from operations for the payment of principal and interest on its indebtedness, thereby reducing its ability to use its cash flow to pay distributions, fund working capital, acquisitions, capital expenditures, and general corporate requirements;
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•
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limiting the combined company's flexibility in planning for, or reacting to, changes in its business and its industry;
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•
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delaying the combined company's ability to consummate a future liquidity event, such as an initial public offering or public stock exchange listing, or causing any such event to occur at a lower valuation than if the combined company had less indebtedness; and
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•
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putting the combined company at a disadvantage compared to its competitors with less indebtedness.
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•
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the combined company may not have enough cash to pay the cash portions of its distributions due to changes in the combined company's cash requirements, capital spending plans, cash flow, or financial position;
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•
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decisions on whether, when, and in which amounts to make any future distributions will remain at all times entirely at the discretion of the combined company's board of directors, which reserves the right to change CWI 2's current distribution practices at any time and for any reason; and
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•
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the combined company may desire to retain cash.
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•
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such company would be subject to U.S. federal income tax on its net income at regular corporate rates for the years it did not qualify for taxation as a REIT (and, for such years, would not be allowed a deduction for dividends paid to stockholders in computing its taxable income);
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•
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such company could be subject to the U.S. federal alternative minimum tax (for taxable years ending prior to January 1, 2018) and possibly increased state and local taxes for such periods;
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•
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unless such company is entitled to relief under applicable statutory provisions of the Code, neither it nor any "successor" company could elect to be taxed as a REIT until the fifth taxable year following the year during which it was disqualified; and
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•
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for up to five years following re-election of REIT status, upon a taxable disposition of an asset owned as of such re-election, such company could be subject to corporate level tax with respect to any built-in gain inherent in such asset at the time of re-election.
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•
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our Advisor and the Subadvisor are compensated for certain transactions on our behalf (e.g., for acquisitions of investments, sales and financings), which may cause our Advisor to engage in transactions that generate higher fees, rather than transactions that are more appropriate or beneficial for our business;
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•
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agreements between us and our Advisor, and between our Advisor and the Subadvisor, including agreements regarding compensation, are not negotiated on an arm’s-length basis, as would occur if the agreements were with unaffiliated third parties;
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•
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acquisitions of single assets or portfolios of assets from affiliates (including WPC or the other investment programs that it manages), subject to our investment policies and procedures, in the form of a direct purchase of assets, a merger or another type of transaction;
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•
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competition with WPC, the other entities managed by it and the Subadvisor for investment acquisitions, which are resolved by our Advisor (although our Advisor is required to use its best efforts to present a continuing and suitable investment program to us, allocation decisions present conflicts of interest, which may not be resolved in the manner most favorable to our interests);
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•
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decisions regarding asset sales, which could impact the timing and amount of fees payable to our Advisor and the Subadvisor as well as allocations and distributions payable to Carey Watermark Holdings 2 pursuant to its special general partner interests;
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•
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decisions regarding potential liquidity events and business combination transactions (including a merger with other investment programs that WPC manages), which may entitle our Advisor, the Subadvisor and their affiliates to receive additional fees and distributions relating to the liquidations; and
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•
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the termination and negotiation of the Advisory Agreement and other agreements with our Advisor, the Subadvisor and their affiliates.
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•
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adverse changes in general or local economic conditions;
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•
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changes in local conditions, such as changes in traffic patterns, mass transit options and neighborhood characteristics;
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•
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increases in the cost of property insurance;
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•
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uninsured property liability, property damage or casualty losses;
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•
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changes in laws and governmental regulations, including those governing real estate usage, zoning, environmental issues and taxes;
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•
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changes in operating expenses or unexpected expenditures for capital improvements;
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•
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exposure to environmental losses; and
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•
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force majeure and other factors beyond the control of our management.
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•
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inability to agree on a favorable price or on favorable terms;
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•
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restrictions imposed by third parties, such as an inability to transfer franchise or management agreements;
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•
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lender restrictions;
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•
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environmental issues; and
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•
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property condition.
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•
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responsibility and liability for the costs of investigation and removal (including at appropriate disposal facilities) or remediation of hazardous or toxic substances in, on or migrating from our real property, generally without regard to our knowledge of, or responsibility for, the presence of the contaminants;
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•
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liability for claims by third parties based on damages to natural resources or property, personal injuries, or costs of removal or remediation of hazardous or toxic substances in, on or migrating from our property; and
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•
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responsibility for managing asbestos-containing building materials, and third-party claims for exposure to those materials.
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•
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competition from other hotel properties or lodging facilities in our markets;
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•
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over-building of hotels in our markets, which would adversely affect occupancy and revenues at our hotels;
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•
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dependence on business and commercial travelers and tourism;
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•
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increases in energy costs and other expenses, which may affect travel patterns and reduce the number of business and commercial travelers and tourists;
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•
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increases in operating costs due to inflation and other factors that may not be offset by increased room rates;
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•
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changes in governmental laws and regulations, fiscal policies and zoning ordinances, and the related compliance costs of such changes;
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•
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adverse effects of international, national, regional and local economic and market conditions;
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•
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unforeseen events beyond our control, such as terrorist attacks, travel related health concerns (including pandemics and epidemics such as the Coronavirus), political instability, governmental restrictions on travel, regional hostilities, imposition of taxes or surcharges by regulatory authorities, travel related accidents and unusual weather patterns (including natural disasters such as hurricanes, wildfires, tsunamis or earthquakes);
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•
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adverse effects of a downturn in the lodging industry; and
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•
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risks generally associated with the ownership of hotel properties and real estate, as discussed in other risk factors.
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any person who beneficially owns, directly or indirectly, 10% or more of the voting power of our outstanding voting stock, referred to as an interested stockholder;
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•
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an affiliate or associate who, at any time within the two-year period prior to the date in question, was the beneficial owner of, directly or indirectly, 10% or more of the voting power of our then outstanding stock, also referred to as an interested stockholder; or
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•
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an affiliate of an interested stockholder.
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not be allowed a deduction for distributions to stockholders in computing our taxable income;
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•
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be subject to federal and state income tax, including any applicable alternative minimum tax for taxable years ending prior to January 1, 2018, on our taxable income at regular corporate rates; and
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•
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be barred from qualifying as a REIT for the four taxable years following the year when we were disqualified.
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•
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reduces the corporate income tax rate from 35% to 21% (including with respect to our TRSs);
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•
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reduces the rate of U.S. federal withholding tax on distributions made to non-U.S. shareholders by a REIT that are attributable to gains from the sale or exchange of U.S. real property interests from 35% to 21%;
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•
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allows for an immediate 100% deduction of the cost of certain capital asset investments (generally excluding real estate assets), subject to a phase-down of the deduction percentage over time;
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•
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changes the recovery periods for certain real property and building improvements (e.g., to 30 years (previously 40 years) for residential real property);
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•
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restricts the deductibility of interest expense by businesses (generally, to 30% of the business’s adjusted taxable income) except, among others, real property businesses electing out of such restriction; generally, we expect our business to qualify as such a real property business;
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•
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requires the use of the less favorable alternative depreciation system to depreciate real property in the event a real property business elects to avoid the interest deduction restriction above;
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•
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restricts the benefits of like-kind exchanges that defer capital gains for tax purposes to exchanges of real property;
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•
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permanently repeals the “technical termination” rule for partnerships, meaning sales or exchanges of the interests in a partnership will be less likely to, among other things, terminate the taxable year of, and restart the depreciable lives of assets held by, such partnership for tax purposes;
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•
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requires accrual method taxpayers to take certain amounts in income no later than the taxable year in which such income is taken into account as revenue in an applicable financial statement prepared under GAAP, which, with respect to certain leases, could accelerate the inclusion of rental income;
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•
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eliminates the federal corporate alternative minimum tax;
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•
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reduces the highest marginal income tax rate for individuals to 37% from 39.6% (excluding, in each case, the 3.8% Medicare tax on net investment income);
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•
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generally allows a deduction for individuals equal to 20% of certain income from pass-through entities, including ordinary dividends distributed by a REIT (excluding capital gain dividends and qualified dividend income), generally resulting in a maximum effective federal income tax rate applicable to such dividends of 29.6% compared to 37% (excluding, in each case, the 3.8% Medicare tax on net investment income), although regulations may restrict the ability to claim this deduction for non-corporate shareholders depending upon their holding period in our stock; and
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•
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limits certain deductions for individuals, including deductions for state and local income taxes, and eliminates deductions for miscellaneous itemized deductions (including certain investment expenses).
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Hotels
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State
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Number
of Rooms
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% Owned
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Acquisition Date
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Hotel Type
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Consolidated Hotels
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Marriott Sawgrass Golf Resort & Spa (a)
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FL
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514
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50%
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4/1/2015
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Resort
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Courtyard Nashville Downtown
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TN
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192
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100%
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5/1/2015
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Select-Service
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Embassy Suites by Hilton Denver-Downtown/Convention Center
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CO
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403
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100%
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11/4/2015
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Full-Service
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Seattle Marriott Bellevue (b)
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WA
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384
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100%
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1/22/2016
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Full-Service
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Le Méridien Arlington
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VA
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154
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100%
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6/28/2016
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Full-Service
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San Jose Marriott
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CA
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510
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100%
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7/13/2016
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Full-Service
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San Diego Marriott La Jolla
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CA
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376
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100%
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7/21/2016
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Full-Service
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Renaissance Atlanta Midtown Hotel
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GA
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304
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100%
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8/30/2016
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Full-Service
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Ritz-Carlton San Francisco
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CA
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336
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100%
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12/30/2016
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Full-Service
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Charlotte Marriott City Center
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NC
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446
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100%
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6/1/2017
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Full-Service
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3,619
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Unconsolidated Hotels
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Ritz-Carlton Key Biscayne (c)
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FL
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443
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19.3%
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5/29/2015
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Resort
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Ritz-Carlton Bacara, Santa Barbara (d)
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CA
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358
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60%
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9/28/2017
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Resort
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801
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(a)
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The remaining 50% interest in this venture is owned by CWI 1.
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(b)
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On October 16, 2019, we purchased the membership interest in the Seattle Marriott Bellevue venture that we did not already own from an unaffiliated third party for $0.3 million, which increased our ownership interest from 95.4% to 100.0% (Note 10).
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(c)
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A 47.4% interest in this venture is owned by CWI 1. The remaining 33.3% interest is retained by the original owner. The number of rooms presented includes 141 condo-hotel units that participate in the condo rental program.
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(d)
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This investment represents a tenancy-in-common interest; the remaining 40% interest is owned by CWI 1.
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Class A
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Class T
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2019 Period
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Total number of shares purchased (a)
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Average price paid per share
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Total number of shares purchased (a)
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Average price paid per share
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Total number of shares purchased as part of publicly announced plans or programs
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Maximum number (or approximate dollar value) of shares that may yet be purchased under the plans or programs
|
||||||
October 1 – 31
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—
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$
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—
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|
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—
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|
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$
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—
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|
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N/A
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N/A
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November 1 – 30
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—
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—
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|
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—
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—
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N/A
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N/A
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December 1 – 31
|
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5,892
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10.85
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15,532
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10.94
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N/A
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N/A
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Total
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5,892
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|
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15,532
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(a)
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Represents shares of our Class A and Class T common stock repurchased under our redemption plan, pursuant to which we may elect to redeem shares at the request of our stockholders, subject to certain exceptions, conditions and limitations. The maximum amount of shares purchasable by us in any period depends on a number of factors and is at the discretion of our board of directors. We generally receive fees in connection with share redemptions. The average price paid per share will vary depending on the number of redemption requests that were made during the period, the number of redemption requests that qualify for treatment as special circumstances under the terms of the plan, and our most recently published NAVs.
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Years Ended December 31,
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2019
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2018
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2017
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2016
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2015
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Operating Data
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Total hotel revenues
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$
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367,207
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$
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362,332
|
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$
|
340,810
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|
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$
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177,600
|
|
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$
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49,085
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Transaction costs
|
4,499
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1,177
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6,511
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26,835
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|
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13,133
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Net income (loss)
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949
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(349
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)
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(4,494
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)
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(17,450
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)
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(12,063
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)
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|||||
Income attributable to noncontrolling interests
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(8,567
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)
|
|
(7,438
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)
|
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(991
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)
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(3,577
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)
|
|
(471
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)
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Net loss attributable to CWI 2 stockholders
|
(7,618
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)
|
|
(7,787
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)
|
|
(5,485
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)
|
|
(21,027
|
)
|
|
(12,534
|
)
|
|||||
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|
|
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|
||||||||||
Basic and diluted loss per share:
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|
|
|
|
|
|
|
|
|
||||||||||
Net loss attributable to CWI 2 stockholders — Class A Common Stock
|
(0.08
|
)
|
|
(0.08
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)
|
|
(0.06
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)
|
|
(0.42
|
)
|
|
(1.71
|
)
|
|||||
Net loss attributable to CWI 2 stockholders — Class T Common Stock
|
(0.08
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)
|
|
(0.09
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)
|
|
(0.07
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)
|
|
(0.43
|
)
|
|
(1.71
|
)
|
|||||
|
|
|
|
|
|
|
|
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|
||||||||||
Distributions declared per share — Class A Common Stock (a)
|
0.6996
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|
|
0.6996
|
|
|
0.6955
|
|
|
0.6570
|
|
|
0.3775
|
|
|||||
Distributions declared per share — Class T Common Stock (b)
|
0.5968
|
|
|
0.5959
|
|
|
0.5919
|
|
|
0.5545
|
|
|
0.3181
|
|
|||||
Balance Sheet Data
|
|
|
|
|
|
|
|
|
|
||||||||||
Total assets
|
$
|
1,576,982
|
|
|
$
|
1,605,314
|
|
|
$
|
1,641,848
|
|
|
$
|
1,407,717
|
|
|
$
|
478,979
|
|
Net investments in real estate (c)
|
1,424,476
|
|
|
1,473,205
|
|
|
1,514,680
|
|
|
1,282,124
|
|
|
396,864
|
|
|||||
Non-recourse and limited-recourse debt, net
|
840,465
|
|
|
833,836
|
|
|
831,329
|
|
|
571,935
|
|
|
207,888
|
|
|||||
Due to related parties and affiliates (d)
|
2,786
|
|
|
1,984
|
|
|
1,726
|
|
|
231,258
|
|
|
4,985
|
|
|||||
Other Information
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Net cash provided by (used in) operating activities
|
$
|
63,502
|
|
|
$
|
68,956
|
|
|
$
|
49,720
|
|
|
$
|
24,559
|
|
|
$
|
(3,553
|
)
|
Cash distributions paid
|
45,345
|
|
|
44,004
|
|
|
36,446
|
|
|
17,633
|
|
|
621
|
|
|||||
Supplemental Financial Measures
|
|
|
|
|
|
|
|
|
|
||||||||||
FFO attributable to CWI 2 stockholders
|
$
|
47,877
|
|
|
$
|
44,668
|
|
|
$
|
36,919
|
|
|
$
|
(321
|
)
|
|
$
|
(8,354
|
)
|
MFFO attributable to CWI 2 stockholders
|
52,417
|
|
|
46,499
|
|
|
44,811
|
|
|
26,086
|
|
|
4,779
|
|
|||||
Consolidated Hotel Operating Statistics (e)
|
|
|
|
|
|
|
|
|
|
||||||||||
Occupancy
|
76.3
|
%
|
|
78.2
|
%
|
|
78.3
|
%
|
|
76.8
|
%
|
|
71.8
|
%
|
|||||
ADR
|
$
|
250.92
|
|
|
$
|
239.41
|
|
|
$
|
233.72
|
|
|
$
|
200.39
|
|
|
$
|
181.86
|
|
RevPAR
|
191.56
|
|
|
187.27
|
|
|
$
|
182.98
|
|
|
$
|
153.89
|
|
|
$
|
130.48
|
|
(a)
|
For the first, second, third and fourth quarters of both 2019 and 2018, $0.0339 of each distribution was payable in shares of our Class A common stock. For the first, second, third and fourth quarters of 2017, $0.0332, $0.0338, $0.0339 and $0.0339 of the distribution was payable in shares of our Class A common stock, respectively. For the first, second, third and fourth quarters of 2016, $0.0250, $0.0263, $0.0332 and $0.0332 of the distribution was payable in shares of our Class A common stock, respectively. For the second, third and fourth quarters of 2015, $0.0129, $0.0250 and $0.0250 of the distribution was payable in shares of our Class A common stock, respectively.
|
(b)
|
For the first, second, third and fourth quarters of both 2019 and 2018, $0.0339 of each distribution was payable in shares of our Class T common stock. For the first, second, third and fourth quarters of 2017, $0.0332, $0.0338, $0.0339 and $0.0339 was payable in shares of our Class T common stock, respectively. For the first, second, third and fourth quarters of 2016, $0.0236, $0.0263, $0.0332 and $0.0332 was payable in shares of our Class T common stock, respectively. For the second, third and fourth quarters of 2015, $0.0122, $0.0236 and $0.0236 was payable in shares of our Class T common stock, respectively.
|
(c)
|
Net investments in real estate consist of Net investments in hotels and Equity investments in real estate.
|
(d)
|
At December 31, 2016, this amount included $210.0 million due to WPC for borrowings used to fund the acquisition of the Ritz-Carlton San Francisco. During the first quarter of 2017, we fully repaid the $210.0 million loan. This amount also included an accrual of $11.9 million for the distribution and shareholder servicing fee, which as of December 31, 2016 was paid to Carey Financial but is now paid directly to selected dealers, and is therefore no longer included in Due to related parties and affiliates as of December 31, 2017.
|
(e)
|
Represents statistical data for our Consolidated Hotels during our ownership period.
|
|
|
Years Ended December 31,
|
||||||
|
|
2019
|
|
2018
|
||||
Hotel revenues
|
|
$
|
367,207
|
|
|
$
|
362,332
|
|
Net loss attributable to CWI 2 stockholders
|
|
(7,618
|
)
|
|
(7,787
|
)
|
||
|
|
|
|
|
||||
Cash distributions paid
|
|
45,345
|
|
|
44,004
|
|
||
|
|
|
|
|
||||
Net cash provided by operating activities
|
|
63,502
|
|
|
68,956
|
|
||
Net cash used in investing activities
|
|
(10,984
|
)
|
|
(11,782
|
)
|
||
Net cash used in financing activities
|
|
(44,680
|
)
|
|
(51,346
|
)
|
||
|
|
|
|
|
||||
Supplemental Financial Measures: (a)
|
|
|
|
|
||||
FFO attributable to CWI 2 stockholders
|
|
47,877
|
|
|
44,668
|
|
||
MFFO attributable to CWI 2 stockholders
|
|
52,417
|
|
|
46,499
|
|
||
|
|
|
|
|
||||
Consolidated Hotel Operating Statistics
|
|
|
|
|
||||
Occupancy
|
|
76.3
|
%
|
|
78.2
|
%
|
||
ADR
|
|
$
|
250.92
|
|
|
$
|
239.41
|
|
RevPAR
|
|
191.56
|
|
|
187.27
|
|
(a)
|
We consider FFO and MFFO, which are non-GAAP measures, to be important measures in the evaluation of our results of operations and capital resources. We evaluate our results of operations with a primary focus on the ability to generate cash flow necessary to meet our objective of funding distributions to stockholders. See Supplemental Financial Measures below for our definitions of these non-GAAP measures and reconciliations to their most directly comparable GAAP measures.
|
Hotels
|
|
State
|
|
Number
of Rooms
|
|
% Owned
|
|
Acquisition Date
|
|
Hotel Type
|
Consolidated Hotels
|
|
|
|
|
|
|
|
|
|
|
2015 Acquisitions
|
|
|
|
|
|
|
|
|
|
|
Marriott Sawgrass Golf Resort & Spa (a)
|
|
FL
|
|
514
|
|
50%
|
|
4/1/2015
|
|
Resort
|
Courtyard Nashville Downtown
|
|
TN
|
|
192
|
|
100%
|
|
5/1/2015
|
|
Select-Service
|
Embassy Suites by Hilton Denver-Downtown/Convention Center
|
|
CO
|
|
403
|
|
100%
|
|
11/4/2015
|
|
Full-Service
|
2016 Acquisitions
|
|
|
|
|
|
|
|
|
|
|
Seattle Marriott Bellevue (b)
|
|
WA
|
|
384
|
|
100%
|
|
1/22/2016
|
|
Full-Service
|
Le Méridien Arlington
|
|
VA
|
|
154
|
|
100%
|
|
6/28/2016
|
|
Full-Service
|
San Jose Marriott
|
|
CA
|
|
510
|
|
100%
|
|
7/13/2016
|
|
Full-Service
|
San Diego Marriott La Jolla
|
|
CA
|
|
376
|
|
100%
|
|
7/21/2016
|
|
Full-Service
|
Renaissance Atlanta Midtown Hotel
|
|
GA
|
|
304
|
|
100%
|
|
8/30/2016
|
|
Full-Service
|
Ritz-Carlton San Francisco
|
|
CA
|
|
336
|
|
100%
|
|
12/30/2016
|
|
Full-Service
|
2017 Acquisition
|
|
|
|
|
|
|
|
|
|
|
Charlotte Marriott City Center
|
|
NC
|
|
446
|
|
100%
|
|
6/1/2017
|
|
Full-Service
|
|
|
|
|
3,619
|
|
|
|
|
|
|
Unconsolidated Hotels
|
|
|
|
|
|
|
|
|
|
|
Ritz-Carlton Key Biscayne (c)
|
|
FL
|
|
443
|
|
19.3%
|
|
5/29/2015
|
|
Resort
|
Ritz-Carlton Bacara, Santa Barbara (d)
|
|
CA
|
|
358
|
|
60%
|
|
9/28/2017
|
|
Resort
|
|
|
|
|
801
|
|
|
|
|
|
|
(a)
|
The remaining 50% interest in this venture is owned by CWI 1.
|
(b)
|
On October 16, 2019, we purchased the membership interest in the Seattle Marriott Bellevue venture that we did not already own from an unaffiliated third party for $0.3 million, which increased our ownership interest from 95.4% to 100.0% (Note 10).
|
(c)
|
A 47.4% interest in this venture is owned by CWI 1. The remaining 33.3% interest is retained by the original owner. The number of rooms presented includes 141 condo-hotel units that participate in the resort rental program.
|
(d)
|
This investment represents a tenancy-in-common interest; the remaining 40% interest is owned by CWI 1.
|
|
|
Years Ended December 31,
|
||||||||||
|
|
2019
|
|
2018
|
|
Change
|
||||||
Hotel Revenues
|
|
$
|
367,207
|
|
|
$
|
362,332
|
|
|
$
|
4,875
|
|
|
|
|
|
|
|
|
||||||
Hotel Operating Expenses
|
|
299,108
|
|
|
293,534
|
|
|
5,574
|
|
|||
|
|
|
|
|
|
|
||||||
Asset management fees to affiliate and other expenses
|
|
10,802
|
|
|
10,932
|
|
|
(130
|
)
|
|||
Corporate general and administrative expenses
|
|
7,623
|
|
|
7,464
|
|
|
159
|
|
|||
Transaction costs
|
|
4,499
|
|
|
1,177
|
|
|
3,322
|
|
|||
(Gain) loss on hurricane-related property damage
|
|
(10
|
)
|
|
682
|
|
|
(692
|
)
|
|||
Total Expenses
|
|
322,022
|
|
|
313,789
|
|
|
8,233
|
|
|||
|
|
|
|
|
|
|
||||||
Operating Income
|
|
45,185
|
|
|
48,543
|
|
|
(3,358
|
)
|
|||
Interest expense
|
|
(39,902
|
)
|
|
(40,226
|
)
|
|
324
|
|
|||
Equity in losses of equity method investment in real estate, net
|
|
(5,209
|
)
|
|
(5,819
|
)
|
|
610
|
|
|||
Other income
|
|
965
|
|
|
792
|
|
|
173
|
|
|||
Loss on extinguishment of debt
|
|
(5
|
)
|
|
(380
|
)
|
|
375
|
|
|||
Income Before Income Taxes
|
|
1,034
|
|
|
2,910
|
|
|
(1,876
|
)
|
|||
Provision for income taxes
|
|
(85
|
)
|
|
(3,259
|
)
|
|
3,174
|
|
|||
Net Income (Loss)
|
|
949
|
|
|
(349
|
)
|
|
1,298
|
|
|||
Income attributable to noncontrolling interests
|
|
(8,567
|
)
|
|
(7,438
|
)
|
|
(1,129
|
)
|
|||
Net Loss Attributable to CWI 2 Stockholders
|
|
$
|
(7,618
|
)
|
|
$
|
(7,787
|
)
|
|
$
|
169
|
|
Supplemental financial measure:(a)
|
|
|
|
|
|
|
||||||
MFFO Attributable to CWI 2 Stockholders
|
|
$
|
52,417
|
|
|
$
|
46,499
|
|
|
$
|
5,918
|
|
(a)
|
We consider MFFO, a non-GAAP measure, to be an important metric in the evaluation of our results of operations and capital resources. We evaluate our results of operations with a primary focus on the ability to generate cash flow necessary to meet our objective of funding distributions to stockholders. See Supplemental Financial Measures below for our definition of non-GAAP measures and reconciliations to their most directly comparable GAAP measures.
|
|
|
Years Ended December 31,
|
||||||
Unconsolidated Hotels
|
|
2019
|
|
2018
|
||||
Ritz-Carlton Bacara, Santa Barbara Venture (a)
|
|
$
|
(5,918
|
)
|
|
$
|
(7,314
|
)
|
Ritz-Carlton Key Biscayne Venture (b)
|
|
709
|
|
|
1,495
|
|
||
Total equity in losses of equity method investments in real estate, net
|
|
$
|
(5,209
|
)
|
|
$
|
(5,819
|
)
|
(a)
|
The decrease in our share of equity in (losses) from the venture for the year ended December 31, 2019 as compared to the same period in 2018 reflects an improvement in the operating results of the venture.
|
(b)
|
The decrease in our share of equity in earnings from the venture for the year ended December 31, 2019 as compared to the same period in 2018 is primarily the result of a decrease in the hotel’s net income, which was impacted by renovations at the hotel.
|
|
|
Years Ended December 31,
|
||||||
Venture
|
|
2019
|
|
2018
|
||||
Marriott Sawgrass Golf Resort & Spa Venture
|
|
$
|
(2,305
|
)
|
|
$
|
(1,971
|
)
|
Operating Partnership — Available Cash Distribution (Note 3)
|
|
(6,262
|
)
|
|
(5,467
|
)
|
||
|
|
$
|
(8,567
|
)
|
|
$
|
(7,438
|
)
|
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||
Carrying Value
|
|
|
|
||||
Fixed rate (a)
|
$
|
483,019
|
|
|
$
|
485,121
|
|
Variable rate (a):
|
|
|
|
||||
Amount subject to interest rate swaps
|
186,642
|
|
|
99,718
|
|
||
Amount subject to interest rate caps
|
170,804
|
|
|
248,997
|
|
||
|
357,446
|
|
|
348,715
|
|
||
|
$
|
840,465
|
|
|
$
|
833,836
|
|
Percent of Total Debt
|
|
|
|
||||
Fixed rate
|
57
|
%
|
|
58
|
%
|
||
Variable rate
|
43
|
%
|
|
42
|
%
|
||
|
100
|
%
|
|
100
|
%
|
||
Weighted-Average Interest Rate at End of Year
|
|
|
|
||||
Fixed rate
|
4.3
|
%
|
|
4.3
|
%
|
||
Variable rate (b)
|
4.1
|
%
|
|
4.9
|
%
|
(a)
|
Aggregate debt balance includes deferred financing costs totaling $3.1 million as of both December 31, 2019 and 2018.
|
(b)
|
The impact of our derivative instruments (Note 7) are reflected in the weighted-average interest rates.
|
|
Total
|
|
Less than
1 year
|
|
1-3 years
|
|
3-5 years
|
|
More than
5 years
|
||||||||||
Non-recourse debt — principal (a)
|
$
|
843,607
|
|
|
$
|
224,614
|
|
|
$
|
539,115
|
|
|
$
|
79,878
|
|
|
$
|
—
|
|
Interest on borrowings (b)
|
72,796
|
|
|
30,114
|
|
|
40,496
|
|
|
2,186
|
|
|
—
|
|
|||||
Contractual capital commitments (c)
|
11,457
|
|
|
11,457
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Annual distribution and shareholder servicing fee (d)
|
5,276
|
|
|
5,276
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
|
$
|
933,136
|
|
|
$
|
271,461
|
|
|
$
|
579,611
|
|
|
$
|
82,064
|
|
|
$
|
—
|
|
(a)
|
Excludes deferred financing costs totaling $3.1 million.
|
(b)
|
For variable-rate debt, interest on borrowings is calculated using the swapped or capped interest rate, when in effect.
|
(c)
|
Capital commitments represent our remaining contractual renovation commitments at our Consolidated Hotels, which does not reflect any remaining restoration work as a result of Hurricane Irma (Note 9).
|
(d)
|
Represents the estimated liability for the present value of the future distribution and shareholder servicing fees in connection with our Class T common stock (Note 3).
|
|
|
Ownership Interest at
|
|
|
|
Total Third-
|
|
Third-Party Debt
|
||||
Venture
|
|
December 31, 2019
|
|
Total Assets
|
|
Party Debt
|
|
Maturity Date
|
||||
Ritz-Carlton Key Biscayne Venture
|
|
19.3%
|
|
$
|
321,730
|
|
|
$
|
185,104
|
|
|
8/2021
|
Ritz-Carlton Bacara, Santa Barbara Venture
|
|
60%
|
|
378,772
|
|
|
228,434
|
|
|
9/2021
|
||
|
|
|
|
$
|
700,502
|
|
|
$
|
413,538
|
|
|
|
|
|
Years Ended December 31,
|
||||||
|
|
2019
|
|
2018
|
||||
Net loss attributable to CWI 2 stockholders
|
|
$
|
(7,618
|
)
|
|
$
|
(7,787
|
)
|
Adjustments:
|
|
|
|
|
||||
Depreciation and amortization of real property
|
|
47,837
|
|
|
46,403
|
|
||
Proportionate share of adjustments for partially owned entities — FFO adjustments
|
|
7,658
|
|
|
6,052
|
|
||
Total adjustments
|
|
55,495
|
|
|
52,455
|
|
||
FFO attributable to CWI 2 stockholders (as defined by NAREIT)
|
|
47,877
|
|
|
44,668
|
|
||
Transaction costs (a)
|
|
4,499
|
|
|
1,177
|
|
||
Other rent adjustments
|
|
44
|
|
|
(67
|
)
|
||
(Gain) loss on hurricane-related property damage (b)
|
|
(10
|
)
|
|
682
|
|
||
Loss on extinguishment of debt
|
|
5
|
|
|
380
|
|
||
Proportionate share of adjustments for partially owned entities — MFFO adjustments
|
|
2
|
|
|
(341
|
)
|
||
Total adjustments
|
|
4,540
|
|
|
1,831
|
|
||
MFFO attributable to CWI 2 stockholders
|
|
$
|
52,417
|
|
|
$
|
46,499
|
|
(a)
|
Transaction costs for the year ended December 31, 2019 are costs incurred in connection with the Proposed Merger and related transactions and included legal, accounting, financial advisory and other transaction costs. We have excluded these costs because of their non-recurring nature. For the year ended December 31, 2018, transaction costs represented acquisition-related costs and fees associated with an acquisition of a Consolidated Hotel. We have excluded theses costs as they are considered outside the normal course of operations. By excluding expensed transaction costs, management believes MFFO provides useful supplemental information that is comparable for each type of real estate investment and is consistent with management’s analysis of the investing and operating performance of our properties.
|
(b)
|
We excluded the (gain) loss on hurricane-related property damage because of its non-recurring nature.
|
|
2020
|
|
2021
|
|
2022
|
|
2023
|
|
2024
|
|
Thereafter
|
|
Total
|
|
Fair Value
|
||||||||||||||||
Fixed-rate debt
|
$
|
4,319
|
|
|
$
|
4,497
|
|
|
$
|
395,618
|
|
|
$
|
79,878
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
484,312
|
|
|
$
|
484,873
|
|
Variable-rate debt
|
$
|
220,295
|
|
|
$
|
49,000
|
|
|
$
|
90,000
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
359,295
|
|
|
$
|
359,295
|
|
TABLE OF CONTENTS
|
Page No.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||
Assets
|
|
|
|
||||
Investments in real estate:
|
|
|
|
||||
Hotels, at cost
|
$
|
1,468,888
|
|
|
$
|
1,464,933
|
|
Accumulated depreciation
|
(157,581
|
)
|
|
(113,184
|
)
|
||
Net investments in hotels
|
1,311,307
|
|
|
1,351,749
|
|
||
Equity investments in real estate
|
113,169
|
|
|
121,456
|
|
||
Cash and cash equivalents
|
81,713
|
|
|
76,823
|
|
||
Restricted cash
|
30,062
|
|
|
27,114
|
|
||
Accounts receivable, net
|
25,719
|
|
|
18,826
|
|
||
Other assets
|
15,012
|
|
|
9,346
|
|
||
Total assets
|
$
|
1,576,982
|
|
|
$
|
1,605,314
|
|
Liabilities and Equity
|
|
|
|
||||
Non-recourse debt, net
|
$
|
840,465
|
|
|
$
|
833,836
|
|
Accounts payable, accrued expenses and other liabilities
|
59,471
|
|
|
61,913
|
|
||
Due to related parties and affiliates
|
2,786
|
|
|
1,984
|
|
||
Distributions payable
|
11,616
|
|
|
11,178
|
|
||
Total liabilities
|
914,338
|
|
|
908,911
|
|
||
Commitments and contingencies (Note 9)
|
|
|
|
||||
Preferred stock, $0.001 par value, 50,000,000 shares authorized; none issued
|
—
|
|
|
—
|
|
||
Class A common stock, $0.001 par value; 320,000,000 shares authorized; 32,762,005 and 31,023,863 shares, respectively, issued and outstanding
|
33
|
|
|
31
|
|
||
Class T common stock, $0.001 par value; 80,000,000 shares authorized; 60,623,093 and 59,006,632 shares, respectively, issued and outstanding
|
61
|
|
|
59
|
|
||
Additional paid-in capital
|
852,051
|
|
|
825,896
|
|
||
Distributions and accumulated losses
|
(210,224
|
)
|
|
(156,823
|
)
|
||
Accumulated other comprehensive (loss) income
|
(157
|
)
|
|
1,205
|
|
||
Total stockholders’ equity
|
641,764
|
|
|
670,368
|
|
||
Noncontrolling interests
|
20,880
|
|
|
26,035
|
|
||
Total equity
|
662,644
|
|
|
696,403
|
|
||
Total liabilities and equity
|
$
|
1,576,982
|
|
|
$
|
1,605,314
|
|
|
Years Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Revenues
|
|
|
|
|
|
||||||
Hotel Revenues
|
|
|
|
|
|
||||||
Rooms
|
$
|
253,044
|
|
|
$
|
247,099
|
|
|
$
|
229,109
|
|
Food and beverage
|
92,400
|
|
|
93,555
|
|
|
92,150
|
|
|||
Other operating revenue
|
20,954
|
|
|
20,744
|
|
|
19,551
|
|
|||
Business interruption income
|
809
|
|
|
934
|
|
|
—
|
|
|||
Total Hotel Revenues
|
367,207
|
|
|
362,332
|
|
|
340,810
|
|
|||
Expenses
|
|
|
|
|
|
||||||
Rooms
|
56,189
|
|
|
57,008
|
|
|
53,554
|
|
|||
Food and beverage
|
67,857
|
|
|
68,132
|
|
|
66,337
|
|
|||
Other hotel operating expenses
|
4,612
|
|
|
5,292
|
|
|
5,674
|
|
|||
General and administrative
|
33,694
|
|
|
32,455
|
|
|
29,817
|
|
|||
Sales and marketing
|
31,601
|
|
|
30,562
|
|
|
30,218
|
|
|||
Property taxes, insurance, rent and other
|
22,918
|
|
|
19,973
|
|
|
18,061
|
|
|||
Management fees
|
13,046
|
|
|
13,014
|
|
|
12,148
|
|
|||
Repairs and maintenance
|
12,848
|
|
|
12,099
|
|
|
11,377
|
|
|||
Utilities
|
8,732
|
|
|
8,862
|
|
|
8,474
|
|
|||
Depreciation
|
47,611
|
|
|
46,137
|
|
|
43,729
|
|
|||
Total Hotel Operating Expenses
|
299,108
|
|
|
293,534
|
|
|
279,389
|
|
|||
Asset management fees to affiliate and other expenses
|
10,802
|
|
|
10,932
|
|
|
8,995
|
|
|||
Corporate general and administrative expenses
|
7,623
|
|
|
7,464
|
|
|
6,403
|
|
|||
Transaction costs
|
4,499
|
|
|
1,177
|
|
|
6,511
|
|
|||
(Gain) loss on hurricane-related property damage
|
(10
|
)
|
|
682
|
|
|
2,699
|
|
|||
Total Expenses
|
322,022
|
|
|
313,789
|
|
|
303,997
|
|
|||
Operating Income
|
45,185
|
|
|
48,543
|
|
|
36,813
|
|
|||
Interest expense
|
(39,902
|
)
|
|
(40,226
|
)
|
|
(35,824
|
)
|
|||
Equity in losses of equity method investment in real estate, net
|
(5,209
|
)
|
|
(5,819
|
)
|
|
(1,482
|
)
|
|||
Other income
|
965
|
|
|
792
|
|
|
155
|
|
|||
Loss on extinguishment of debt
|
(5
|
)
|
|
(380
|
)
|
|
(256
|
)
|
|||
Income (loss) before income taxes
|
1,034
|
|
|
2,910
|
|
|
(594
|
)
|
|||
Provision for income taxes
|
(85
|
)
|
|
(3,259
|
)
|
|
(3,900
|
)
|
|||
Net Income (Loss)
|
949
|
|
|
(349
|
)
|
|
(4,494
|
)
|
|||
Income attributable to noncontrolling interests (inclusive of Available Cash Distributions to a related party of $6,262, $5,467 and $5,078, respectively)
|
(8,567
|
)
|
|
(7,438
|
)
|
|
(991
|
)
|
|||
Net Loss Attributable to CWI 2 Stockholders
|
$
|
(7,618
|
)
|
|
$
|
(7,787
|
)
|
|
$
|
(5,485
|
)
|
|
|
|
|
|
|
||||||
Class A Common Stock
|
|
|
|
|
|
||||||
Net loss attributable to CWI 2 stockholders
|
$
|
(2,509
|
)
|
|
$
|
(2,443
|
)
|
|
$
|
(1,740
|
)
|
Basic and diluted weighted-average shares outstanding
|
32,260,398
|
|
|
30,390,179
|
|
|
27,825,037
|
|
|||
Basic and diluted loss per share
|
$
|
(0.08
|
)
|
|
$
|
(0.08
|
)
|
|
$
|
(0.06
|
)
|
|
|
|
|
|
|
||||||
Class T Common Stock
|
|
|
|
|
|
||||||
Net loss attributable to CWI 2 stockholders
|
$
|
(5,109
|
)
|
|
$
|
(5,344
|
)
|
|
$
|
(3,745
|
)
|
Basic and diluted weighted-average shares outstanding
|
60,499,745
|
|
|
58,842,820
|
|
|
54,686,084
|
|
|||
Basic and diluted loss per share
|
$
|
(0.08
|
)
|
|
$
|
(0.09
|
)
|
|
$
|
(0.07
|
)
|
|
Years Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Net Income (Loss)
|
$
|
949
|
|
|
$
|
(349
|
)
|
|
$
|
(4,494
|
)
|
Other Comprehensive (Loss) Income
|
|
|
|
|
|
||||||
Unrealized (loss) gain on derivative instruments
|
(1,309
|
)
|
|
(171
|
)
|
|
484
|
|
|||
Comprehensive Loss
|
(360
|
)
|
|
(520
|
)
|
|
(4,010
|
)
|
|||
|
|
|
|
|
|
||||||
Amounts Attributable to Noncontrolling Interests
|
|
|
|
|
|
||||||
Net income
|
(8,567
|
)
|
|
(7,438
|
)
|
|
(991
|
)
|
|||
Unrealized (gain) loss on derivative instruments
|
(53
|
)
|
|
3
|
|
|
(7
|
)
|
|||
Comprehensive income attributable to noncontrolling interests
|
(8,620
|
)
|
|
(7,435
|
)
|
|
(998
|
)
|
|||
Comprehensive Loss Attributable to CWI 2 Stockholders
|
$
|
(8,980
|
)
|
|
$
|
(7,955
|
)
|
|
$
|
(5,008
|
)
|
|
CWI 2 Stockholders
|
|
|
|
|
||||||||||||||||||||||||||||||||
|
Common Stock
|
|
Additional
Paid-In
Capital
|
|
Distributions
and
Accumulated
Losses
|
|
Accumulated
Other
Comprehensive Income (Loss)
|
|
Total CWI 2
Stockholders’
Equity
|
|
Noncontrolling
Interests
|
|
Total
Stockholders’
Equity
|
||||||||||||||||||||||||
|
Class A
|
|
Class T
|
|
|
|
|
|
|
||||||||||||||||||||||||||||
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
|
|
|
|
|
||||||||||||||||||||||||
Balance at January 1, 2019
|
31,023,863
|
|
|
$
|
31
|
|
|
59,006,632
|
|
|
$
|
59
|
|
|
$
|
825,896
|
|
|
$
|
(156,823
|
)
|
|
$
|
1,205
|
|
|
$
|
670,368
|
|
|
$
|
26,035
|
|
|
$
|
696,403
|
|
Net (loss) income
|
|
|
|
|
|
|
|
|
|
|
(7,618
|
)
|
|
|
|
(7,618
|
)
|
|
8,567
|
|
|
949
|
|
||||||||||||||
Shares issued, net of offering costs
|
726,688
|
|
|
1
|
|
|
1,581,775
|
|
|
2
|
|
|
26,137
|
|
|
|
|
|
|
26,140
|
|
|
|
|
26,140
|
|
|||||||||||
Shares issued to affiliates
|
944,647
|
|
|
1
|
|
|
|
|
|
|
10,707
|
|
|
|
|
|
|
10,708
|
|
|
|
|
10,708
|
|
|||||||||||||
Distributions to noncontrolling interests
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
(13,478
|
)
|
|
(13,478
|
)
|
|||||||||||||||
Purchase of membership interest from noncontrolling interest
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
(297
|
)
|
|
(297
|
)
|
|||||||||||||||
Shares issued under share incentive plans
|
19,352
|
|
|
—
|
|
|
|
|
|
|
248
|
|
|
|
|
|
|
248
|
|
|
|
|
248
|
|
|||||||||||||
Stock-based compensation to directors
|
18,476
|
|
|
—
|
|
|
|
|
|
|
210
|
|
|
|
|
|
|
210
|
|
|
|
|
210
|
|
|||||||||||||
Stock dividends issued
|
378,971
|
|
|
—
|
|
|
712,942
|
|
|
1
|
|
|
|
|
|
|
|
|
1
|
|
|
|
|
1
|
|
||||||||||||
Distributions declared ($0.6996 and $0.5968 per share to Class A and Class T, respectively)
|
|
|
|
|
|
|
|
|
|
|
(45,783
|
)
|
|
|
|
(45,783
|
)
|
|
|
|
(45,783
|
)
|
|||||||||||||||
Other comprehensive (loss) income
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,362
|
)
|
|
(1,362
|
)
|
|
53
|
|
|
(1,309
|
)
|
||||||||||||||
Repurchase of shares
|
(349,992
|
)
|
|
—
|
|
|
(678,256
|
)
|
|
(1
|
)
|
|
(11,147
|
)
|
|
|
|
|
|
(11,148
|
)
|
|
|
|
(11,148
|
)
|
|||||||||||
Balance at December 31, 2019
|
32,762,005
|
|
|
$
|
33
|
|
|
60,623,093
|
|
|
$
|
61
|
|
|
$
|
852,051
|
|
|
$
|
(210,224
|
)
|
|
$
|
(157
|
)
|
|
$
|
641,764
|
|
|
$
|
20,880
|
|
|
$
|
662,644
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Balance at January 1, 2018
|
29,510,914
|
|
|
$
|
29
|
|
|
57,871,712
|
|
|
$
|
58
|
|
|
$
|
807,377
|
|
|
$
|
(104,809
|
)
|
|
$
|
1,373
|
|
|
$
|
704,028
|
|
|
$
|
27,757
|
|
|
$
|
731,785
|
|
Net (loss) income
|
|
|
|
|
|
|
|
|
|
|
(7,787
|
)
|
|
|
|
(7,787
|
)
|
|
7,438
|
|
|
(349
|
)
|
||||||||||||||
Shares issued, net of offering costs
|
769,324
|
|
|
1
|
|
|
1,640,727
|
|
|
1
|
|
|
27,067
|
|
|
|
|
|
|
27,069
|
|
|
|
|
27,069
|
|
|||||||||||
Shares issued to affiliates
|
943,271
|
|
|
1
|
|
|
|
|
|
|
10,392
|
|
|
|
|
|
|
10,393
|
|
|
|
|
10,393
|
|
|||||||||||||
Distributions to noncontrolling interests
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
(9,157
|
)
|
|
(9,157
|
)
|
|||||||||||||||
Shares issued under share incentive plans
|
17,535
|
|
|
—
|
|
|
|
|
|
|
216
|
|
|
|
|
|
|
216
|
|
|
|
|
216
|
|
|||||||||||||
Stock-based compensation to directors
|
15,384
|
|
|
—
|
|
|
|
|
|
|
171
|
|
|
|
|
|
|
171
|
|
|
|
|
171
|
|
|||||||||||||
Stock dividends issued
|
370,644
|
|
|
1
|
|
|
719,272
|
|
|
1
|
|
|
|
|
|
|
|
|
2
|
|
|
|
|
2
|
|
||||||||||||
Distributions declared ($0.6996 and $0.5959 per share to Class A and Class T, respectively)
|
|
|
|
|
|
|
|
|
|
|
(44,227
|
)
|
|
|
|
(44,227
|
)
|
|
|
|
(44,227
|
)
|
|||||||||||||||
Other comprehensive loss
|
|
|
|
|
|
|
|
|
|
|
|
|
(168
|
)
|
|
(168
|
)
|
|
(3
|
)
|
|
(171
|
)
|
||||||||||||||
Repurchase of shares
|
(603,209
|
)
|
|
(1
|
)
|
|
(1,225,079
|
)
|
|
(1
|
)
|
|
(19,327
|
)
|
|
|
|
|
|
(19,329
|
)
|
|
|
|
(19,329
|
)
|
|||||||||||
Balance at December 31, 2018
|
31,023,863
|
|
|
$
|
31
|
|
|
59,006,632
|
|
|
$
|
59
|
|
|
$
|
825,896
|
|
|
$
|
(156,823
|
)
|
|
$
|
1,205
|
|
|
$
|
670,368
|
|
|
$
|
26,035
|
|
|
$
|
696,403
|
|
|
CWI 2 Stockholders
|
|
|
|
|
||||||||||||||||||||||||||||||||
|
Common Stock
|
|
Additional
Paid-In Capital |
|
Distributions
and Accumulated Losses |
|
Accumulated
Other Comprehensive (Loss) Income |
|
Total CWI 2
Stockholders’ Equity |
|
Noncontrolling
Interests |
|
Total
Stockholders’ Equity |
||||||||||||||||||||||||
|
Class A
|
|
Class T
|
|
|
|
|
|
|
||||||||||||||||||||||||||||
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
|
|
|
|
|
||||||||||||||||||||||||
Balance at January 1, 2017
|
22,414,128
|
|
|
$
|
22
|
|
|
40,447,362
|
|
|
$
|
40
|
|
|
$
|
573,135
|
|
|
$
|
(59,115
|
)
|
|
$
|
896
|
|
|
$
|
514,978
|
|
|
$
|
35,131
|
|
|
$
|
550,109
|
|
Net (loss) income
|
|
|
|
|
|
|
|
|
|
|
(5,485
|
)
|
|
|
|
(5,485
|
)
|
|
991
|
|
|
(4,494
|
)
|
||||||||||||||
Shares issued, net of offering costs
|
6,027,028
|
|
|
6
|
|
|
17,129,299
|
|
|
17
|
|
|
232,827
|
|
|
|
|
|
|
232,850
|
|
|
|
|
232,850
|
|
|||||||||||
Shares issued to affiliates
|
1,064,066
|
|
|
1
|
|
|
|
|
|
|
11,393
|
|
|
|
|
|
|
11,394
|
|
|
|
|
11,394
|
|
|||||||||||||
Distributions to noncontrolling interests
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
(8,372
|
)
|
|
(8,372
|
)
|
|||||||||||||||
Purchase of membership interest from noncontrolling interest
|
|
|
|
|
|
|
|
|
(3,524
|
)
|
|
|
|
|
|
(3,524
|
)
|
|
|
|
(3,524
|
)
|
|||||||||||||||
Shares issued under share incentive plans
|
14,071
|
|
|
—
|
|
|
|
|
|
|
190
|
|
|
|
|
|
|
190
|
|
|
|
|
190
|
|
|||||||||||||
Stock-based compensation to directors
|
15,384
|
|
|
—
|
|
|
|
|
|
|
165
|
|
|
|
|
|
|
165
|
|
|
|
|
165
|
|
|||||||||||||
Stock dividends issued
|
320,922
|
|
|
—
|
|
|
615,421
|
|
|
1
|
|
|
|
|
|
|
|
|
1
|
|
|
|
|
1
|
|
||||||||||||
Distributions declared ($0.6955 and $0.5919 per share to Class A and Class T, respectively)
|
|
|
|
|
|
|
|
|
|
|
(40,209
|
)
|
|
|
|
(40,209
|
)
|
|
|
|
(40,209
|
)
|
|||||||||||||||
Other comprehensive income
|
|
|
|
|
|
|
|
|
|
|
|
|
477
|
|
|
477
|
|
|
7
|
|
|
484
|
|
||||||||||||||
Repurchase of shares
|
(344,685
|
)
|
|
—
|
|
|
(320,370
|
)
|
|
—
|
|
|
(6,809
|
)
|
|
|
|
|
|
(6,809
|
)
|
|
|
|
(6,809
|
)
|
|||||||||||
Balance at December 31, 2017
|
29,510,914
|
|
|
$
|
29
|
|
|
57,871,712
|
|
|
$
|
58
|
|
|
$
|
807,377
|
|
|
$
|
(104,809
|
)
|
|
$
|
1,373
|
|
|
$
|
704,028
|
|
|
$
|
27,757
|
|
|
$
|
731,785
|
|
|
Years Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Cash Flows — Operating Activities
|
|
|
|
|
|
||||||
Net income (loss)
|
$
|
949
|
|
|
$
|
(349
|
)
|
|
$
|
(4,494
|
)
|
Adjustments to net income (loss):
|
|
|
|
|
|
||||||
Depreciation
|
47,611
|
|
|
46,137
|
|
|
43,729
|
|
|||
Asset management fees to affiliates settled in shares
|
10,734
|
|
|
10,400
|
|
|
8,670
|
|
|||
Equity in losses of equity method investments in real estate, net
|
5,209
|
|
|
5,819
|
|
|
1,482
|
|
|||
Amortization of deferred financing costs, deferred key money and other
|
1,149
|
|
|
1,297
|
|
|
830
|
|
|||
Business interruption income
|
(809
|
)
|
|
(934
|
)
|
|
—
|
|
|||
Amortization of stock-based compensation
|
566
|
|
|
486
|
|
|
436
|
|
|||
(Gain) loss on hurricane-related property damage
|
(10
|
)
|
|
682
|
|
|
2,699
|
|
|||
Loss on extinguishment of debt
|
5
|
|
|
380
|
|
|
254
|
|
|||
Net changes in other assets and liabilities
|
(5,341
|
)
|
|
2,436
|
|
|
1,360
|
|
|||
Business interruption insurance proceeds
|
1,690
|
|
|
53
|
|
|
—
|
|
|||
Distributions of earnings from equity method investments
|
1,342
|
|
|
2,305
|
|
|
1,310
|
|
|||
Receipt of key money and other deferred incentive payments
|
305
|
|
|
—
|
|
|
2,688
|
|
|||
Increase (decrease) in due to related parties and affiliates
|
102
|
|
|
407
|
|
|
(7,786
|
)
|
|||
Funding of hurricane-related remediation work
|
—
|
|
|
(163
|
)
|
|
(1,458
|
)
|
|||
Net Cash Provided by Operating Activities
|
63,502
|
|
|
68,956
|
|
|
49,720
|
|
|||
Cash Flows — Investing Activities
|
|
|
|
|
|
||||||
Capital expenditures
|
(10,607
|
)
|
|
(16,915
|
)
|
|
(17,049
|
)
|
|||
Distributions from equity investments in excess of
cumulative equity income
|
7,418
|
|
|
5,619
|
|
|
—
|
|
|||
Capital contributions to equity investments in real estate
|
(5,745
|
)
|
|
(486
|
)
|
|
(2,433
|
)
|
|||
Payment of Watermark commitment fee
|
(2,050
|
)
|
|
—
|
|
|
—
|
|
|||
Acquisitions of hotels
|
—
|
|
|
—
|
|
|
(168,884
|
)
|
|||
Purchase of equity interest
|
—
|
|
|
—
|
|
|
(96,288
|
)
|
|||
Deposits released for hotel investments
|
—
|
|
|
—
|
|
|
1,521
|
|
|||
Hurricane-related property insurance proceeds
|
—
|
|
|
—
|
|
|
7
|
|
|||
Net Cash Used in Investing Activities
|
(10,984
|
)
|
|
(11,782
|
)
|
|
(283,126
|
)
|
|||
Cash Flows — Financing Activities
|
|
|
|
|
|
||||||
Proceeds from mortgage financing
|
90,000
|
|
|
49,000
|
|
|
301,900
|
|
|||
Scheduled payments and prepayments of mortgage principal
|
(83,299
|
)
|
|
(47,502
|
)
|
|
(42,000
|
)
|
|||
Distributions paid
|
(45,345
|
)
|
|
(44,004
|
)
|
|
(36,446
|
)
|
|||
Net proceeds from issuance of shares
|
20,531
|
|
|
20,670
|
|
|
237,650
|
|
|||
Distributions to noncontrolling interests
|
(13,478
|
)
|
|
(9,157
|
)
|
|
(8,372
|
)
|
|||
Repurchase of shares
|
(11,148
|
)
|
|
(19,327
|
)
|
|
(6,809
|
)
|
|||
Deferred financing costs
|
(1,521
|
)
|
|
(809
|
)
|
|
(2,090
|
)
|
|||
Purchase of membership interest from noncontrolling interest
|
(297
|
)
|
|
—
|
|
|
(3,524
|
)
|
|||
Withholding on restricted stock units
|
(108
|
)
|
|
(99
|
)
|
|
(81
|
)
|
|||
Purchase of interest rate cap
|
(15
|
)
|
|
(118
|
)
|
|
(16
|
)
|
|||
Repayment of notes payable to affiliate
|
—
|
|
|
—
|
|
|
(210,000
|
)
|
|||
Deposits released for mortgage financing
|
—
|
|
|
—
|
|
|
2,235
|
|
|||
Deposits for mortgage financing
|
—
|
|
|
—
|
|
|
(725
|
)
|
|||
Net Cash (Used in) Provided by Financing Activities
|
(44,680
|
)
|
|
(51,346
|
)
|
|
231,722
|
|
|||
Change in Cash and Cash Equivalents and Restricted Cash During the Year
|
|
|
|
|
|
||||||
Net increase (decrease) in cash and cash equivalents and restricted cash
|
7,838
|
|
|
5,828
|
|
|
(1,684
|
)
|
|||
Cash and cash equivalents and restricted cash, beginning of year
|
103,937
|
|
|
98,109
|
|
|
99,793
|
|
|||
Cash and cash equivalents and restricted cash, end of year
|
$
|
111,775
|
|
|
$
|
103,937
|
|
|
$
|
98,109
|
|
|
Years Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Interest paid, net of amounts capitalized
|
$
|
37,963
|
|
|
$
|
38,193
|
|
|
$
|
33,135
|
|
Income taxes paid
|
$
|
4,429
|
|
|
$
|
2,248
|
|
|
$
|
4,721
|
|
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||
Net investments in hotels
|
$
|
123,833
|
|
|
$
|
566,272
|
|
Total assets
|
145,218
|
|
|
603,403
|
|
||
|
|
|
|
||||
Non-recourse debt, net
|
$
|
88,747
|
|
|
$
|
320,603
|
|
Total liabilities
|
104,046
|
|
|
350,920
|
|
|
December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Cash and cash equivalents
|
$
|
81,713
|
|
|
$
|
76,823
|
|
|
$
|
68,527
|
|
Restricted cash
|
30,062
|
|
|
27,114
|
|
|
29,582
|
|
|||
Total cash and cash equivalents and restricted cash
|
$
|
111,775
|
|
|
$
|
103,937
|
|
|
$
|
98,109
|
|
|
Years Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Amounts Included in the Consolidated Statements of Operations
|
|
|
|
|
|
||||||
Asset management fees
|
$
|
10,734
|
|
|
$
|
10,400
|
|
|
$
|
8,670
|
|
Available Cash Distributions
|
6,262
|
|
|
5,467
|
|
|
5,078
|
|
|||
Personnel and overhead reimbursements
|
4,170
|
|
|
4,069
|
|
|
3,514
|
|
|||
Acquisition fees
|
—
|
|
|
—
|
|
|
4,415
|
|
|||
Interest expense
|
—
|
|
|
—
|
|
|
332
|
|
|||
Accretion of interest on annual distribution and shareholder servicing fee (a)
|
—
|
|
|
—
|
|
|
198
|
|
|||
|
$
|
21,166
|
|
|
$
|
19,936
|
|
|
$
|
22,207
|
|
|
|
|
|
|
|
||||||
Other Transaction Fees Incurred
|
|
|
|
|
|
||||||
Watermark commitment agreement
|
$
|
2,850
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Capitalized loan refinancing fees
|
225
|
|
|
245
|
|
|
280
|
|
|||
Selling commissions and dealer manager fees
|
—
|
|
|
—
|
|
|
13,199
|
|
|||
Annual distribution and shareholder servicing fee (a)
|
—
|
|
|
—
|
|
|
8,439
|
|
|||
Capitalized acquisition fees for equity method investment (b)
|
—
|
|
|
—
|
|
|
6,195
|
|
|||
Organization and offering costs
|
—
|
|
|
—
|
|
|
1,453
|
|
|||
|
$
|
3,075
|
|
|
$
|
245
|
|
|
$
|
29,566
|
|
(a)
|
Starting with the payment of the third quarter 2017 distribution and shareholder servicing fee (which was paid in October 2017), we began making payments directly to selected dealers rather than through Carey Financial, LLC (“Carey
|
(b)
|
Our Advisor elected to receive 50% of the acquisition fee related to our investment in the Ritz-Carlton Bacara, Santa Barbara Venture in shares of our Class A common stock and 50% in cash.
|
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||
Amounts Due to Related Parties and Affiliates
|
|
|
|
||||
Reimbursable costs due to our Advisor
|
$
|
956
|
|
|
$
|
1,100
|
|
Asset management fees and other due to our Advisor
|
894
|
|
|
884
|
|
||
Watermark commitment agreement
|
800
|
|
|
—
|
|
||
Due to other related parties and affiliates
|
136
|
|
|
—
|
|
||
|
$
|
2,786
|
|
|
$
|
1,984
|
|
(i)
|
the advisory agreements with WPC for both us and CWI 1 will terminate;
|
(ii)
|
the operating partnerships of both us and CWI 1 will redeem the special general partnership interests that WPC and Watermark currently hold, for which they will receive, in the aggregate, approximately $97.4 million in consideration, comprised of $65.0 million in shares of our preferred stock and 2,840,549 shares in our Class A common stock valued at approximately $32.4 million. Watermark will receive 2,417,996 limited partnership units in our Operating Partnership with an aggregate value of $27.6 million;
|
(iii)
|
the combined company will internalize the management services currently provided by WPC;
|
(iv)
|
WPC will provide certain transition services at cost to us for periods generally up to 12 months from the closing of the Proposed Merger; and
|
(v)
|
Watermark will provide certain transition services at cost to us and we will provide certain transaction services at cost to them for periods generally up to six months from the closing of the Proposed Merger.
|
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||
Buildings
|
$
|
1,090,693
|
|
|
$
|
1,093,865
|
|
Land
|
236,078
|
|
|
236,078
|
|
||
Furniture, fixtures and equipment
|
93,333
|
|
|
93,766
|
|
||
Building and site improvements
|
42,318
|
|
|
38,670
|
|
||
Construction in progress
|
6,466
|
|
|
2,554
|
|
||
Hotels, at cost
|
1,468,888
|
|
|
1,464,933
|
|
||
Less: Accumulated depreciation
|
(157,581
|
)
|
|
(113,184
|
)
|
||
Net investments in hotels
|
$
|
1,311,307
|
|
|
$
|
1,351,749
|
|
(in thousands)
|
|
Years Ended December 31,
|
||||||||||
|
|
2019
|
|
2018
|
|
2017
|
||||||
Net write-off (write-up) of fixed assets (a)
|
|
$
|
3,476
|
|
|
$
|
(173
|
)
|
|
$
|
4,938
|
|
Remediation work performed
|
|
—
|
|
|
133
|
|
|
1,476
|
|
|||
(Increase) decrease to property damage insurance receivables
|
|
(3,486
|
)
|
|
722
|
|
|
(3,715
|
)
|
|||
(Gain) loss on hurricane-related property damage
|
|
$
|
(10
|
)
|
|
$
|
682
|
|
|
$
|
2,699
|
|
(a)
|
Includes write-offs totaling $1.4 million during the year ended December 31, 2018 resulting from pre-existing damage (which was discovered as a result of Hurricane Irma and was not covered by insurance).
|
|
Year Ended
December 31, 2017
|
||
Pro forma total revenues
|
$
|
356,634
|
|
|
|
||
Pro forma net income
|
$
|
1,391
|
|
Pro forma income attributable to noncontrolling interests
|
(991
|
)
|
|
Pro forma net income attributable to CWI 2 stockholders
|
$
|
400
|
|
|
|
||
Class A Common Stock
|
|
||
Pro forma net income attributable to CWI 2 stockholders
|
$
|
260
|
|
|
|
||
Class T Common Stock
|
|
||
Pro forma net income attributable to CWI 2 stockholders
|
$
|
140
|
|
Unconsolidated Hotels
|
|
State
|
|
Number
of Rooms
|
|
% Owned
|
|
Hotel Type
|
|
Carrying Value at December 31,
|
||||||||
|
|
|
|
|
2019
|
|
2018
|
|||||||||||
Ritz-Carlton Bacara, Santa Barbara Venture (a) (b)
|
|
CA
|
|
358
|
|
|
60
|
%
|
|
Resort
|
|
$
|
77,837
|
|
|
$
|
85,110
|
|
Ritz-Carlton Key Biscayne Venture (c) (d)
|
|
FL
|
|
443
|
|
|
19.3
|
%
|
|
Resort
|
|
35,332
|
|
|
36,346
|
|
||
|
|
|
|
801
|
|
|
|
|
|
|
$
|
113,169
|
|
|
$
|
121,456
|
|
(a)
|
This investment represents a tenancy-in-common interest; the remaining 40% interest is owned by CWI 1.
|
(b)
|
We received $1.3 million of net cash distributions from this investment during the year ended December 31, 2019, which included our share of key money received from Marriott during the third quarter of 2019.
|
(c)
|
CWI 1 acquired a 47.4% interest in the venture on the same date. The remaining 33.3% interest is retained by the original owner. The number of rooms presented includes 141 condo-hotel units that participate in the resort rental program. This investment is considered a VIE (Note 2). We do not consolidate this entity because we are not the primary beneficiary and the nature of our involvement in the activities of the entity allows us to exercise significant influence but does not give us power over decisions that significantly affect the economic performance of the entity.
|
(d)
|
We received cash distributions of $1.7 million from this investment during the year ended December 31, 2019.
|
|
|
Years Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
|||||||
Ritz-Carlton Bacara, Santa Barbara Venture
|
|
$
|
(5,918
|
)
|
|
$
|
(7,314
|
)
|
|
$
|
(4,235
|
)
|
Ritz-Carlton Key Biscayne Venture
|
|
709
|
|
|
1,495
|
|
|
2,753
|
|
|||
Total equity in losses of equity method investments in real estate, net
|
|
$
|
(5,209
|
)
|
|
$
|
(5,819
|
)
|
|
$
|
(1,482
|
)
|
|
|
2019
|
|
2018
|
|
2017
|
||||||||||||||||||||||||||||||
|
|
Total
|
|
Ritz-Carlton Bacara, Santa Barbara Venture
|
|
Ritz-Carlton Key Biscayne Venture
|
|
Total
|
|
Ritz-Carlton Bacara, Santa Barbara Venture
|
|
Ritz-Carlton Key Biscayne Venture
|
|
Total
|
|
Ritz-Carlton Bacara, Santa Barbara Venture (a)
|
|
Ritz-Carlton Key Biscayne Venture
|
||||||||||||||||||
Balance Sheet – As of December 31,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Real estate, net
|
|
$
|
636,372
|
|
|
$
|
358,723
|
|
|
$
|
277,649
|
|
|
$
|
643,145
|
|
|
$
|
362,386
|
|
|
$
|
280,759
|
|
|
$
|
646,943
|
|
|
$
|
367,035
|
|
|
$
|
279,908
|
|
Other assets
|
|
64,130
|
|
|
20,049
|
|
|
44,081
|
|
|
66,027
|
|
|
20,093
|
|
|
45,934
|
|
|
78,059
|
|
|
28,294
|
|
|
49,765
|
|
|||||||||
Total assets
|
|
700,502
|
|
|
378,772
|
|
|
321,730
|
|
|
709,172
|
|
|
382,479
|
|
|
326,693
|
|
|
725,002
|
|
|
395,329
|
|
|
329,673
|
|
|||||||||
Debt
|
|
413,538
|
|
|
228,434
|
|
|
185,104
|
|
|
415,973
|
|
|
227,535
|
|
|
188,438
|
|
|
416,335
|
|
|
226,636
|
|
|
189,699
|
|
|||||||||
Other liabilities
|
|
50,973
|
|
|
30,350
|
|
|
20,623
|
|
|
42,099
|
|
|
23,092
|
|
|
19,007
|
|
|
34,567
|
|
|
16,382
|
|
|
18,185
|
|
|||||||||
Total liabilities
|
|
464,511
|
|
|
258,784
|
|
|
205,727
|
|
|
458,072
|
|
|
250,627
|
|
|
207,445
|
|
|
450,902
|
|
|
243,018
|
|
|
207,884
|
|
|||||||||
Members’ equity
|
|
235,991
|
|
|
119,988
|
|
|
116,003
|
|
|
251,100
|
|
|
131,852
|
|
|
119,248
|
|
|
274,100
|
|
|
152,311
|
|
|
121,789
|
|
|||||||||
Percentage of ownership in equity investee
|
|
|
|
60
|
%
|
|
19.3
|
%
|
|
|
|
60
|
%
|
|
19.3
|
%
|
|
|
|
60
|
%
|
|
19.3
|
%
|
||||||||||||
Pro-rata equity carrying value
|
|
94,382
|
|
|
71,993
|
|
|
22,389
|
|
|
102,126
|
|
|
79,111
|
|
|
23,015
|
|
|
114,892
|
|
|
91,387
|
|
|
23,505
|
|
|||||||||
Basis differential adjustment
|
|
7,602
|
|
|
5,844
|
|
|
1,758
|
|
|
7,757
|
|
|
5,999
|
|
|
1,758
|
|
|
8,026
|
|
|
6,197
|
|
|
1,829
|
|
|||||||||
HLBV adjustment
|
|
11,185
|
|
|
—
|
|
|
11,185
|
|
|
11,573
|
|
|
—
|
|
|
11,573
|
|
|
11,820
|
|
|
—
|
|
|
11,820
|
|
|||||||||
Carrying value
|
|
$
|
113,169
|
|
|
$
|
77,837
|
|
|
$
|
35,332
|
|
|
$
|
121,456
|
|
|
$
|
85,110
|
|
|
$
|
36,346
|
|
|
$
|
134,738
|
|
|
$
|
97,584
|
|
|
$
|
37,154
|
|
|
|
2019
|
|
2018
|
|
2017
|
||||||||||||||||||||||||||||||
|
|
Total
|
|
Ritz-Carlton Bacara, Santa Barbara Venture
|
|
Ritz-Carlton Key Biscayne Venture
|
|
Total
|
|
Ritz-Carlton Bacara, Santa Barbara Venture
|
|
Ritz-Carlton Key Biscayne Venture
|
|
Total
|
|
Ritz-Carlton Bacara, Santa Barbara Venture (a)
|
|
Ritz-Carlton Key Biscayne Venture
|
||||||||||||||||||
Income Statement – For the year ended December 31,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Hotel revenues
|
|
$
|
174,282
|
|
|
$
|
83,247
|
|
|
$
|
91,035
|
|
|
$
|
179,199
|
|
|
$
|
81,670
|
|
|
$
|
97,529
|
|
|
$
|
99,800
|
|
|
$
|
15,269
|
|
|
$
|
84,531
|
|
Hotel operating expenses
|
|
158,535
|
|
|
78,474
|
|
|
80,061
|
|
|
164,601
|
|
|
79,955
|
|
|
84,646
|
|
|
95,423
|
|
|
18,906
|
|
|
76,517
|
|
|||||||||
Other operating expenses
|
|
67
|
|
|
8
|
|
|
59
|
|
|
179
|
|
|
86
|
|
|
93
|
|
|
59
|
|
|
52
|
|
|
7
|
|
|||||||||
Other income and (expenses) (b)
|
|
(21,818
|
)
|
|
(14,203
|
)
|
|
(7,615
|
)
|
|
(20,384
|
)
|
|
(13,494
|
)
|
|
(6,890
|
)
|
|
(14,395
|
)
|
|
(3,161
|
)
|
|
(11,234
|
)
|
|||||||||
(Provision for) benefit from income taxes
|
|
(410
|
)
|
|
(166
|
)
|
|
(244
|
)
|
|
(141
|
)
|
|
—
|
|
|
(141
|
)
|
|
1,121
|
|
|
(208
|
)
|
|
1,329
|
|
|||||||||
Net (loss) income
|
|
(6,548
|
)
|
|
(9,604
|
)
|
|
3,056
|
|
|
(6,106
|
)
|
|
(11,865
|
)
|
|
5,759
|
|
|
(8,956
|
)
|
|
(7,058
|
)
|
|
(1,898
|
)
|
|||||||||
Percentage of ownership in equity investee
|
|
|
|
60
|
%
|
|
19.3
|
%
|
|
|
|
60
|
%
|
|
19.3
|
%
|
|
|
|
60
|
%
|
|
19.3
|
%
|
||||||||||||
Pro-rata equity in (losses) earnings of equity method investments in real estate
|
|
(5,172
|
)
|
|
(5,762
|
)
|
|
590
|
|
|
(6,008
|
)
|
|
(7,119
|
)
|
|
1,111
|
|
|
(4,601
|
)
|
|
(4,235
|
)
|
|
(366
|
)
|
|||||||||
Basis differential adjustment
|
|
(227
|
)
|
|
(156
|
)
|
|
(71
|
)
|
|
(266
|
)
|
|
(195
|
)
|
|
(71
|
)
|
|
(71
|
)
|
|
—
|
|
|
(71
|
)
|
|||||||||
HLBV adjustment
|
|
190
|
|
|
—
|
|
|
190
|
|
|
455
|
|
|
—
|
|
|
455
|
|
|
3,190
|
|
|
—
|
|
|
3,190
|
|
|||||||||
Equity in (losses) earnings of equity method investments in real estate
|
|
$
|
(5,209
|
)
|
|
$
|
(5,918
|
)
|
|
$
|
709
|
|
|
$
|
(5,819
|
)
|
|
$
|
(7,314
|
)
|
|
$
|
1,495
|
|
|
$
|
(1,482
|
)
|
|
$
|
(4,235
|
)
|
|
$
|
2,753
|
|
(a)
|
We purchased our 60% interest in this venture on September 28, 2017.
|
(b)
|
Other income and (expenses) for the years ended December 31, 2019 and 2018 for the Ritz-Carlton Bacara, Santa Barbara Venture is primarily comprised of interest expense related to its outstanding mortgage loans.
|
Derivatives Designated as Hedging Instruments
|
|
|
|
Asset Derivatives Fair Value at December 31,
|
||||||
|
Balance Sheet Location
|
|
2019
|
|
2018
|
|||||
Interest rate swaps
|
|
Other assets
|
|
$
|
121
|
|
|
$
|
1,368
|
|
Interest rate caps
|
|
Other assets
|
|
—
|
|
|
57
|
|
||
|
|
|
|
$
|
121
|
|
|
$
|
1,425
|
|
|
|
Number of
|
|
Notional
|
|
Fair Value at
|
|||||
Interest Rate Derivatives
|
|
Instruments
|
|
Amount
|
|
December 31, 2019
|
|||||
Interest rate swaps
|
|
2
|
|
|
$
|
187,910
|
|
|
$
|
121
|
|
Interest rate caps
|
|
3
|
|
|
171,385
|
|
|
—
|
|
||
|
|
|
|
|
|
$
|
121
|
|
|
|
|
|
|
|
|
|
Carrying Amount at December 31,
|
||||||
Consolidated Hotels
|
|
Interest Rate
|
|
Rate Type
|
|
Maturity Date
|
|
2019
|
|
2018
|
||||
Seattle Marriott Bellevue (a) (b) (c)
|
|
3.88%
|
|
Variable
|
|
1/2020
|
|
$
|
97,895
|
|
|
$
|
99,719
|
|
Le Méridien Arlington (b) (c)
|
|
4.44%
|
|
Variable
|
|
6/2020
|
|
34,755
|
|
|
34,787
|
|
||
San Jose Marriott (b) (c)
|
|
4.44%
|
|
Variable
|
|
7/2020
|
|
87,460
|
|
|
87,880
|
|
||
Renaissance Atlanta Midtown Hotel (b) (d)
|
|
3.96%
|
|
Variable
|
|
8/2021
|
|
48,589
|
|
|
48,332
|
|
||
Ritz-Carlton San Francisco
|
|
4.59%
|
|
Fixed
|
|
2/2022
|
|
142,923
|
|
|
142,887
|
|
||
Charlotte Marriott City Center
|
|
4.53%
|
|
Fixed
|
|
6/2022
|
|
102,636
|
|
|
102,488
|
|
||
Courtyard Nashville Downtown
|
|
4.15%
|
|
Fixed
|
|
9/2022
|
|
54,965
|
|
|
55,051
|
|
||
Marriott Sawgrass Golf Resort & Spa (b) (d)
|
|
3.76%
|
|
Variable
|
|
11/2022
|
|
88,747
|
|
|
77,997
|
|
||
Embassy Suites by Hilton Denver-Downtown/Convention Center
|
|
3.90%
|
|
Fixed
|
|
12/2022
|
|
98,073
|
|
|
99,818
|
|
||
San Diego Marriott La Jolla
|
|
4.13%
|
|
Fixed
|
|
8/2023
|
|
84,422
|
|
|
84,877
|
|
||
|
|
|
|
|
|
|
|
$
|
840,465
|
|
|
$
|
833,836
|
|
(a)
|
On January 22, 2020, we refinanced this loan with a new $98.8 million non-recourse mortgage loan. The loan has a floating annual interest rate of LIBOR plus 2.7%, which has effectively been fixed at 4.2% through an interest rate swap agreement, and a maturity date of January 22, 2023.
|
(b)
|
These mortgage loans have variable interest rates, which have effectively been capped or converted to fixed rates through the use of interest rate caps or swaps (Note 7). The interest rates presented for these mortgage loans reflect the rates in effect at December 31, 2019 through the use of an interest rate cap or swap, as applicable.
|
(c)
|
These mortgage loans have one-year extension options, which are subject to certain conditions. The maturity dates in the table do not reflect the extension options.
|
(d)
|
These mortgage loans have two one-year extension options, which are subject to certain conditions. The maturity dates in the table do not reflect the extension options.
|
Years Ending December 31,
|
|
Total
|
||
2020 (a)
|
|
$
|
224,614
|
|
2021
|
|
53,497
|
|
|
2022
|
|
485,618
|
|
|
2023
|
|
79,878
|
|
|
2024
|
|
—
|
|
|
Total principal payments
|
|
843,607
|
|
|
Unamortized deferred financing costs
|
|
(3,142
|
)
|
|
Total
|
|
$
|
840,465
|
|
(a)
|
Balance included a $97.7 million scheduled balloon payment on a consolidated mortgage loan, which was refinanced on January 22, 2020.
|
|
Year Ended December 31, 2019
|
|||||||||
|
Basic and Diluted Weighted-Average
Shares Outstanding |
|
Allocation of Loss
|
|
Basic and Diluted Loss
Per Share |
|||||
Class A common stock
|
32,260,398
|
|
|
$
|
(2,509
|
)
|
|
$
|
(0.08
|
)
|
Class T common stock
|
60,499,745
|
|
|
(5,109
|
)
|
|
(0.08
|
)
|
||
Net loss attributable to CWI 2 stockholders
|
|
|
$
|
(7,618
|
)
|
|
|
|
Year Ended December 31, 2018
|
|||||||||
|
Basic and Diluted Weighted-Average
Shares Outstanding |
|
Allocation of Loss
|
|
Basic and Diluted Loss
Per Share |
|||||
Class A common stock
|
30,390,179
|
|
|
$
|
(2,443
|
)
|
|
$
|
(0.08
|
)
|
Class T common stock
|
58,842,820
|
|
|
(5,344
|
)
|
|
(0.09
|
)
|
||
Net loss attributable to CWI 2 stockholders
|
|
|
$
|
(7,787
|
)
|
|
|
|
Year Ended December 31, 2017
|
|||||||||
|
Basic and Diluted Weighted-Average
Shares Outstanding |
|
Allocation of Loss
|
|
Basic and Diluted Loss
Per Share |
|||||
Class A common stock
|
27,825,037
|
|
|
$
|
(1,740
|
)
|
|
$
|
(0.06
|
)
|
Class T common stock
|
54,686,084
|
|
|
(3,745
|
)
|
|
(0.07
|
)
|
||
Net loss attributable to CWI 2 stockholders
|
|
|
$
|
(5,485
|
)
|
|
|
|
|
Years Ended December 31,
|
||||||||||
Gains and Losses on Derivative Instruments
|
|
2019
|
|
2018
|
|
2017
|
||||||
Beginning balance
|
|
$
|
1,205
|
|
|
$
|
1,373
|
|
|
$
|
896
|
|
Other comprehensive (loss) income before reclassifications
|
|
(335
|
)
|
|
544
|
|
|
265
|
|
|||
Amounts reclassified from accumulated other comprehensive income to:
|
|
|
|
|
|
|
||||||
Interest expense
|
|
(1,004
|
)
|
|
(715
|
)
|
|
219
|
|
|||
Equity in losses of equity method investments in real estate, net
|
|
30
|
|
|
—
|
|
|
—
|
|
|||
Total
|
|
(974
|
)
|
|
(715
|
)
|
|
219
|
|
|||
Net current period other comprehensive (loss) income
|
|
(1,309
|
)
|
|
(171
|
)
|
|
484
|
|
|||
Net current period other comprehensive (income) loss attributable to noncontrolling interests
|
|
(53
|
)
|
|
3
|
|
|
(7
|
)
|
|||
Ending balance
|
|
$
|
(157
|
)
|
|
$
|
1,205
|
|
|
$
|
1,373
|
|
|
Years Ended December 31,
|
||||||||||||||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||||||||||||||
|
Class A
|
|
Class T
|
|
Class A
|
|
Class T
|
|
Class A
|
|
Class T
|
||||||||||||
Return of capital
|
$
|
0.4679
|
|
|
$
|
0.3826
|
|
|
$
|
0.4656
|
|
|
$
|
0.3817
|
|
|
$
|
0.3541
|
|
|
$
|
0.2866
|
|
Ordinary income
|
0.0961
|
|
|
0.0785
|
|
|
0.0984
|
|
|
0.0807
|
|
|
0.2037
|
|
|
0.1649
|
|
||||||
Total distributions paid
|
$
|
0.5640
|
|
|
$
|
0.4611
|
|
|
$
|
0.5640
|
|
|
$
|
0.4624
|
|
|
$
|
0.5578
|
|
|
$
|
0.4515
|
|
Class A Common Stock
|
|
Class T Common Stock
|
||||||||||||||||||||
Cash
|
|
Shares
|
|
Total
|
|
Cash
|
|
Shares
|
|
Total
|
||||||||||||
$
|
0.1410
|
|
|
$
|
0.0339
|
|
|
$
|
0.1749
|
|
|
$
|
0.1154
|
|
|
$
|
0.0339
|
|
|
$
|
0.1493
|
|
|
RSU Awards
|
|||||
|
|
|
Weighted-Average
|
|||
|
|
|
Grant Date
|
|||
|
Shares
|
|
Fair Value
|
|||
Nonvested at January 1, 2017
|
56,153
|
|
|
$
|
10.36
|
|
Granted
|
49,344
|
|
|
10.74
|
|
|
Vested (a)
|
(21,745)
|
|
|
10.31
|
|
|
Forfeited
|
(24,747)
|
|
|
10.57
|
|
|
Nonvested at January 1, 2018
|
59,005
|
|
|
10.61
|
|
|
Granted
|
34,295
|
|
|
11.11
|
|
|
Vested (a)
|
(26,403
|
)
|
|
10.51
|
|
|
Forfeited
|
(3,909
|
)
|
|
10.96
|
|
|
Nonvested at January 1, 2019
|
62,988
|
|
|
10.90
|
|
|
Granted
|
42,541
|
|
|
11.41
|
|
|
Vested (a)
|
(28,801
|
)
|
|
10.82
|
|
|
Forfeited
|
(2,653
|
)
|
|
10.68
|
|
|
Nonvested at December 31, 2019 (b)
|
74,075
|
|
|
$
|
11.23
|
|
(a)
|
RSUs generally vest over three years, are subject to continued employment and are forfeited upon the recipient’s employment termination prior to vesting. The total fair value of shares vested during the year ended December 31, 2019, 2018 and 2017 was $0.3 million, $0.3 million and $0.2 million, respectively.
|
(b)
|
We currently expect to recognize stock-based compensation expense totaling approximately $0.5 million over the remaining vesting period. The awards to employees of the Subadvisor had a weighted-average remaining contractual term of 1.7 years at December 31, 2019.
|
|
At December 31,
|
||||||
|
2019
|
|
2018
|
||||
Deferred Tax Assets
|
|
|
|
||||
Deferred revenue — key money
|
$
|
1,478
|
|
|
$
|
1,696
|
|
Accrued vacation payable and deferred rent
|
1,544
|
|
|
1,265
|
|
||
Net operating loss carryforwards
|
785
|
|
|
617
|
|
||
Interest expense limitation
|
39
|
|
|
—
|
|
||
Gift card liability
|
1
|
|
|
2
|
|
||
Other
|
403
|
|
|
453
|
|
||
Total deferred income taxes
|
4,250
|
|
|
4,033
|
|
||
Valuation allowance
|
(782
|
)
|
|
(2,956
|
)
|
||
Total deferred tax assets
|
3,468
|
|
|
1,077
|
|
||
Deferred Tax Liabilities
|
|
|
|
||||
Deferred rent
|
(119
|
)
|
|
—
|
|
||
Other
|
(80
|
)
|
|
(100
|
)
|
||
Total deferred tax liabilities
|
(199
|
)
|
|
(100
|
)
|
||
Net Deferred Tax Asset
|
$
|
3,269
|
|
|
$
|
977
|
|
|
Years Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Pre-tax income from taxable subsidiaries
|
$
|
12,016
|
|
|
$
|
13,768
|
|
|
$
|
9,581
|
|
|
|
|
|
|
|
||||||
Federal provision at statutory tax rate (a)
|
$
|
2,524
|
|
|
$
|
2,892
|
|
|
$
|
3,353
|
|
Valuation allowance
|
(2,174
|
)
|
|
(127
|
)
|
|
(1,020
|
)
|
|||
Income not subject to federal tax
|
(513
|
)
|
|
(555
|
)
|
|
(1,102
|
)
|
|||
State and local taxes, net of federal provision
|
387
|
|
|
539
|
|
|
644
|
|
|||
Other
|
(174
|
)
|
|
477
|
|
|
126
|
|
|||
Non-deductible expenses
|
35
|
|
|
33
|
|
|
42
|
|
|||
Revaluation of deferred taxes due to Tax Cuts and Jobs Act (b)
|
—
|
|
|
—
|
|
|
1,857
|
|
|||
Total provision
|
$
|
85
|
|
|
$
|
3,259
|
|
|
$
|
3,900
|
|
(a)
|
The applicable statutory tax rate was 21%, 21%, and 35% for the years ended December 31, 2019, 2018 and 2017, respectively.
|
(b)
|
The Tax Cuts and Jobs Act, which was signed into law on December 22, 2017, lowered the U.S. corporate income tax rate from 35% to 21%. This amount reflects the net impact of the Tax Cuts and Jobs Act on our domestic TRSs.
|
|
Three Months Ended
|
||||||||||||||
|
March 31, 2019
|
|
June 30, 2019
|
|
September 30, 2019
|
|
December 31, 2019
|
||||||||
Revenues
|
$
|
96,006
|
|
|
$
|
95,094
|
|
|
$
|
88,432
|
|
|
$
|
87,675
|
|
Operating expenses
|
80,597
|
|
|
80,997
|
|
|
79,452
|
|
|
80,976
|
|
||||
Net income (loss)
|
5,453
|
|
|
2,799
|
|
|
(2,325
|
)
|
|
(4,978
|
)
|
||||
Income attributable to noncontrolling interests
|
(4,429
|
)
|
|
(1,840
|
)
|
|
(369
|
)
|
|
(1,929
|
)
|
||||
Net income (loss) attributable to CWI 2 stockholders
|
$
|
1,024
|
|
|
$
|
959
|
|
|
$
|
(2,694
|
)
|
|
$
|
(6,907
|
)
|
Basic and diluted income (loss) per share — Class A common stock (a)
|
$
|
0.01
|
|
|
$
|
0.01
|
|
|
$
|
(0.03
|
)
|
|
$
|
(0.07
|
)
|
Basic and diluted income (loss) per share — Class T common stock (a)
|
$
|
0.01
|
|
|
$
|
0.01
|
|
|
$
|
(0.03
|
)
|
|
$
|
(0.07
|
)
|
|
Three Months Ended
|
||||||||||||||
|
March 31, 2018
|
|
June 30, 2018
|
|
September 30, 2018
|
|
December 31, 2018
|
||||||||
Revenues
|
$
|
91,179
|
|
|
$
|
98,100
|
|
|
$
|
87,177
|
|
|
$
|
85,876
|
|
Operating expenses
|
77,622
|
|
|
81,784
|
|
|
76,650
|
|
|
77,733
|
|
||||
Net income (loss)
|
1,584
|
|
|
4,334
|
|
|
(1,411
|
)
|
|
(4,856
|
)
|
||||
Income attributable to noncontrolling interests
|
(3,078
|
)
|
|
(1,249
|
)
|
|
(1,194
|
)
|
|
(1,917
|
)
|
||||
Net (loss) income attributable to CWI 2 stockholders
|
$
|
(1,494
|
)
|
|
$
|
3,085
|
|
|
$
|
(2,605
|
)
|
|
$
|
(6,773
|
)
|
Basic and diluted (loss) income per share — Class A common stock (a)
|
$
|
(0.02
|
)
|
|
$
|
0.04
|
|
|
$
|
(0.03
|
)
|
|
$
|
(0.07
|
)
|
Basic and diluted (loss) income per share — Class T common stock (a)
|
$
|
(0.02
|
)
|
|
$
|
0.03
|
|
|
$
|
(0.03
|
)
|
|
$
|
(0.08
|
)
|
(a)
|
Income (loss) per share in each quarter is computed using the weighted-average number of shares outstanding during that quarter while income (loss) per share for the full year is computed using the weighted-average number of shares outstanding during the year. Therefore, the sum of the four quarters income (loss) per share may not equal the full-year income (loss) per share.
|
Description
|
|
Balance at
Beginning
of Year
|
|
Other
Additions
|
|
Deductions
|
|
Balance at
End of Year
|
||||||||
Year Ended December 31, 2019
|
|
|
|
|
|
|
|
|
||||||||
Valuation reserve for deferred tax assets
|
|
$
|
2,956
|
|
|
$
|
150
|
|
|
$
|
(2,324
|
)
|
|
$
|
782
|
|
|
|
|
|
|
|
|
|
|
||||||||
Year Ended December 31, 2018
|
|
|
|
|
|
|
|
|
||||||||
Valuation reserve for deferred tax assets
|
|
$
|
3,083
|
|
|
$
|
632
|
|
|
$
|
(759
|
)
|
|
$
|
2,956
|
|
|
|
|
|
|
|
|
|
|
||||||||
Year Ended December 31, 2017
|
|
|
|
|
|
|
|
|
||||||||
Valuation reserve for deferred tax assets
|
|
$
|
4,102
|
|
|
$
|
—
|
|
|
$
|
(1,019
|
)
|
|
$
|
3,083
|
|
|
|
|
|
Initial Cost to Company
|
|
Costs
Capitalized Subsequent to
Acquisition (a)
|
|
(Decrease) Increase
In Net
Investments (b)
|
|
Gross Amount at which Carried at
Close of Period (c)
|
|
|
|
|
|
|
|
Life on which Depreciation in Latest Statement of Income is Computed
|
||||||||||||||||||||||||
Description
|
|
Encumbrances
|
|
Land
|
|
Buildings
|
|
|
|
Land
|
|
Buildings
|
|
Total
|
|
Accumulated
Depreciation (c)
|
|
Date of
Construction
|
|
Date
Acquired
|
|
|||||||||||||||||||||
Marriott Sawgrass Golf Resort & Spa
|
|
$
|
88,747
|
|
|
$
|
26,400
|
|
|
$
|
93,551
|
|
|
$
|
23,755
|
|
|
$
|
(7,710
|
)
|
|
$
|
26,400
|
|
|
$
|
109,596
|
|
|
$
|
135,996
|
|
|
$
|
17,482
|
|
|
1987
|
|
Apr 2015
|
|
4 – 40 yrs.
|
Courtyard Nashville Downtown
|
|
54,965
|
|
|
8,500
|
|
|
47,443
|
|
|
2,291
|
|
|
51
|
|
|
8,500
|
|
|
49,785
|
|
|
58,285
|
|
|
6,359
|
|
|
1998
|
|
May 2015
|
|
4 – 40 yrs.
|
|||||||||
Embassy Suites by Hilton Denver-Downtown/Convention Center
|
|
98,073
|
|
|
13,000
|
|
|
153,358
|
|
|
2,921
|
|
|
—
|
|
|
13,000
|
|
|
156,279
|
|
|
169,279
|
|
|
16,814
|
|
|
2010
|
|
Nov 2015
|
|
4 – 40 yrs.
|
|||||||||
Seattle Marriott Bellevue
|
|
97,895
|
|
|
19,500
|
|
|
149,111
|
|
|
391
|
|
|
—
|
|
|
19,500
|
|
|
149,502
|
|
|
169,002
|
|
|
14,712
|
|
|
2015
|
|
Jan 2016
|
|
4 – 40 yrs.
|
|||||||||
Le Méridien Arlington
|
|
34,755
|
|
|
8,900
|
|
|
43,191
|
|
|
1,593
|
|
|
—
|
|
|
8,900
|
|
|
44,784
|
|
|
53,684
|
|
|
4,363
|
|
|
2007
|
|
Jun 2016
|
|
4 – 40 yrs.
|
|||||||||
San Jose Marriott
|
|
87,460
|
|
|
7,509
|
|
|
138,319
|
|
|
1,635
|
|
|
—
|
|
|
7,509
|
|
|
139,954
|
|
|
147,463
|
|
|
12,319
|
|
|
2003
|
|
Jul 2016
|
|
4 – 40 yrs.
|
|||||||||
San Diego Marriott La Jolla
|
|
84,422
|
|
|
20,264
|
|
|
110,300
|
|
|
5,365
|
|
|
32
|
|
|
20,264
|
|
|
115,697
|
|
|
135,961
|
|
|
10,554
|
|
|
1985
|
|
Jul 2016
|
|
4 – 40 yrs.
|
|||||||||
Renaissance Atlanta Midtown Hotel
|
|
48,589
|
|
|
8,600
|
|
|
64,441
|
|
|
3,448
|
|
|
—
|
|
|
8,600
|
|
|
67,889
|
|
|
76,489
|
|
|
5,955
|
|
|
2009
|
|
Aug 2016
|
|
4 – 40 yrs.
|
|||||||||
Ritz-Carlton San Francisco
|
|
142,923
|
|
|
98,605
|
|
|
170,372
|
|
|
1,620
|
|
|
—
|
|
|
98,605
|
|
|
171,992
|
|
|
270,597
|
|
|
13,116
|
|
|
1991
|
|
Dec 2016
|
|
4 – 40 yrs.
|
|||||||||
Charlotte Marriott City Center
|
|
102,636
|
|
|
24,800
|
|
|
127,287
|
|
|
246
|
|
|
—
|
|
|
24,800
|
|
|
127,533
|
|
|
152,333
|
|
|
8,286
|
|
|
1983
|
|
Jun 2017
|
|
4 – 40 yrs.
|
|||||||||
|
|
$
|
840,465
|
|
|
$
|
236,078
|
|
|
$
|
1,097,373
|
|
|
$
|
43,265
|
|
|
$
|
(7,627
|
)
|
|
$
|
236,078
|
|
|
$
|
1,133,011
|
|
|
$
|
1,369,089
|
|
|
$
|
109,960
|
|
|
|
|
|
|
|
(a)
|
Consists of the cost of improvements subsequent to acquisition, including construction costs primarily for renovations pursuant to our contractual obligations.
|
(b)
|
The decrease in net investment of the Marriott Sawgrass Golf Resort & Spa was related primarily to the net write-off of assets damaged by Hurricane Irma (Note 4).
|
(c)
|
A reconciliation of hotels and accumulated depreciation follows:
|
|
Reconciliation of Hotels
|
||||||||||
|
Years Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Beginning balance
|
$
|
1,368,613
|
|
|
$
|
1,357,258
|
|
|
$
|
1,191,218
|
|
Improvements
|
3,664
|
|
|
11,250
|
|
|
18,587
|
|
|||
(Write-off) write-up of assets damaged by hurricane (Note 4)
|
(3,170
|
)
|
|
105
|
|
|
(4,633
|
)
|
|||
Write-off of fully depreciated assets
|
(18
|
)
|
|
—
|
|
|
—
|
|
|||
Additions
|
—
|
|
|
—
|
|
|
152,086
|
|
|||
Ending balance
|
$
|
1,369,089
|
|
|
$
|
1,368,613
|
|
|
$
|
1,357,258
|
|
|
Reconciliation of Accumulated Depreciation for Hotels
|
||||||||||
|
Years Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Beginning balance
|
$
|
78,078
|
|
|
$
|
47,221
|
|
|
$
|
18,506
|
|
Depreciation expense
|
31,900
|
|
|
30,857
|
|
|
28,715
|
|
|||
Write-off of fully depreciated assets
|
(18
|
)
|
|
—
|
|
|
—
|
|
|||
Ending balance
|
$
|
109,960
|
|
|
$
|
78,078
|
|
|
$
|
47,221
|
|
Exhibit No.
|
|
|
Description
|
|
Method of Filing
|
2.1
|
|
|
Agreement and Plan of Merger, dated as of October 22, 2019, among Carey Watermark Investors Incorporated, Carey Watermark Investors 2 Incorporated, and Apex Merger Sub LLC.
|
|
Incorporated by reference to Exhibit 2.1 to Current Report on Form 8-K, filed on October 22, 2019
|
|
|
|
|
|
|
2.2
|
|
|
Internalization Agreement, dated as of October 22, 2019, among Carey Watermark Investors Incorporated, CWI OP, LP, Carey Watermark Investors 2 Incorporated, CWI 2 OP, LP, W. P. Carey Inc., Carey Watermark Holdings, LLC, CLA Holdings, LLC, Carey REIT II, Inc., WPC Holdco LLC, Carey Watermark Holdings 2, LLC, Carey Lodging Advisors, LLC, Watermark Capital Partners, LLC, CWA, LLC, and CWA 2, LLC.
|
|
Incorporated by reference to Exhibit 2.2 to Current Report on Form 8-K, filed on October 22, 2019
|
|
|
|
|
|
|
3.1
|
|
|
Second Articles of Amendment and Restatement of Carey Watermark Investors 2 Incorporated
|
|
Incorporated by reference to Exhibit 3.1 to Form 10‑Q filed on May 15, 2015
|
|
|
|
|
|
|
3.2
|
|
|
Amended and Restated Bylaws of Carey Watermark Investors 2 Incorporated
|
|
Incorporated by reference to Exhibit 3.1 to Current Report on Form 8-K filed on June 27, 2018
|
|
|
|
|
|
|
4.1
|
|
|
Amended and Restated Distribution Reinvestment Plan
|
|
Incorporated by reference to Exhibit 4.1 to Form 10-K filed on March 14, 2016
|
|
|
|
|
|
|
4.2
|
|
|
Form of Notice to Stockholder
|
|
Incorporated by reference to Exhibit 4.2 to Registration Statement on Form S-11 (File No. 333-196681) filed on August 7, 2014
|
|
|
|
|
|
|
4.3
|
|
|
Description of Securities under Section 12 of the Exchange Act
|
|
Filed herewith
|
|
|
|
|
|
|
10.1
|
|
|
Advisory Agreement dated February 9, 2015, between Carey Watermark Investors 2 Incorporated, CWI 2 OP, LP, and Carey Lodging Advisors, LLC
|
|
Incorporated by reference to Exhibit 10.1 to Form 10‑Q filed on May 15, 2015
|
|
|
|
|
|
|
10.2
|
|
|
Subadvisory Agreement dated February 9, 2015 between Carey Lodging Advisors, LLC, and CWA 2, LLC
|
|
Incorporated by reference to Exhibit 10.2 to Form 10‑Q filed on May 15, 2015
|
|
|
|
|
|
|
10.3
|
|
|
Agreement of Limited Partnership of CWI 2 OP, LP dated as of February 9, 2015, by and among Carey Watermark Investors 2 Incorporated and Carey Watermark Holdings 2, LLC
|
|
Incorporated by reference to Exhibit 10.3 to Form 10‑Q filed on May 15, 2015
|
|
|
|
|
|
|
10.4
|
|
|
2015 Equity Incentive Plan
|
|
Incorporated by reference to Exhibit 10.6 to Form 10‑Q filed on May 15, 2015
|
|
|
|
|
|
|
10.5
|
|
|
Indemnification Agreement dated February 9, 2015, between Carey Watermark Investors 2 Incorporated and CWA2, LLC
|
|
Incorporated by reference to Exhibit 10.7 to Form 10‑Q filed on May 15, 2015
|
|
|
|
|
|
|
10.6
|
|
|
Form of Indemnification Agreement between Carey Watermark Investors 2 Incorporated and its directors and executive officers
|
|
Incorporated by reference to Exhibit 10.8 to Form 10‑Q filed on May 15, 2015
|
|
|
|
|
|
|
10.7
|
|
|
Amended and Restated Limited Liability Company Agreement of CWI Sawgrass Holdings, LLC dated April 1, 2015
|
|
Incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K filed on April 2, 2015
|
|
|
|
|
|
Exhibit No.
|
|
|
Description
|
|
Method of Filing
|
10.8
|
|
|
First Amendment to Advisory Agreement, dated as of June 30, 2015, by and among Carey Watermark Investors 2 Incorporated, CWI 2 OP, LP and Carey Lodging Advisors, LLC.
|
|
Incorporated by reference to Exhibit 10.2 to W. P. Carey Inc.’s Quarterly Report on Form 10-Q (File No. 001-13779) filed on August 7, 2015.
|
|
|
|
|
|
|
10.9
|
|
|
Amended and Restated Limited Liability Company Operating Agreement of CWI Key Biscayne Hotel, LLC, by and between CWI OP, LP and CWI 2 OP, LP dated as of May 29, 2015
|
|
Incorporated by reference to Exhibit 10.1 to current Report on Form 8-K filed on June 4, 2015
|
|
|
|
|
|
|
10.10
|
|
|
Second Amendment to Advisory Agreement, dated as of June 13, 2017, by and among Carey Watermark Investors 2 Incorporated, CWI 2 OP, LP and Carey Lodging Advisors, LLC
|
|
Incorporated by reference to Exhibit 10.27 to W. P. Carey Inc.’s Annual Report on Form 10-K (File No. 001-13779) filed February 23, 2018
|
|
|
|
|
|
|
10.11
|
|
|
Payment Guaranty, between W.P. Carey Inc. as Lender, and Carey Watermark Investors 2 Inc. as Guarantor, dated as of October 19, 2017
|
|
Incorporated by reference to Exhibit 10.2 to Quarterly Report on Form 10-Q for the quarter ended September 30, 2017, filed on November 13, 2017
|
|
|
|
|
|
|
10.12
|
|
|
Pledge and Security Agreement between W.P. Carey Inc. as Lender, and CWI 2 OP, LP as Pledgor, dated October 19, 2017
|
|
Incorporated by reference to Exhibit 10.3 to Quarterly Report on Form 10-Q for the quarter ended September 30, 2017, filed on November 13, 2017
|
|
|
|
|
|
|
10.13
|
|
|
Promissory Note, between W.P. Carey Inc. as Lender, and CWI 2 OP, LP as Borrower, dated as of October 19, 2017
|
|
Incorporated by reference to Exhibit 10.4 to Quarterly Report on Form 10-Q for the quarter ended September 30, 2017, filed on November 13, 2017
|
|
|
|
|
|
|
10.14
|
|
|
First Amendment to the Loan Agreement, between W. P. Carey, as Lender, and CWI 2 OP, LP, as Borrower, effective September 30, 2018
|
|
Incorporated by reference to Exhibit 10.1 to Quarterly Report on Form 10‑Q for the Quarter ended September 30, 2018
|
|
|
|
|
|
|
10.15
|
|
|
Commitment Agreement, dated as of October 1, 2019, among Watermark Capital Partners, LLC, Carey Watermark Investors Incorporated, Carey Watermark Investors 2 Incorporated, and Michael Medzigian.
|
|
Incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K, filed on October 22, 2019
|
|
|
|
|
|
|
10.16
|
|
|
Second Amendment of the Loan Agreement between W. P. Carey, as Lender, and CWI 2 OP LP, as Borrower, effective September 30, 2019
|
|
Filed herewith
|
|
|
|
|
|
|
10.17
|
|
|
Third Amendment of the Loan Agreement between W. P. Carey, as Lender, and CWI 2 OP LP, as Borrower, effective January 16, 2020
|
|
Filed herewith
|
|
|
|
|
|
|
10.18
|
|
|
Transition Services Agreement, dated as of October 22, 2019, between Watermark Capital Partners, LLC, and Carey Watermark Investors 2 Incorporated.
|
|
Incorporated by reference to Exhibit 10.2 to Current Report on Form 8-K, filed on October 22, 2019
|
|
|
|
|
|
|
10.19
|
|
|
Transition Services Agreement, dated as of October 22, 2019, between W. P. Carey Inc., and Carey Watermark Investors 2 Incorporated.
|
|
Incorporated by reference to Exhibit 10.3 to Current Report on Form 8-K, filed on October 22, 2019
|
|
|
|
|
|
|
10.20
|
|
|
Employment Agreement, dated as of October 22, 2019, between Carey Watermark Investors 2 Incorporated and Michael G. Medzigian.
|
|
Incorporated by reference to Exhibit 10.4 to Current Report on Form 8-K, filed on October 22, 2019
|
Exhibit No.
|
|
|
Description
|
|
Method of Filing
|
21.1
|
|
|
List of Registrant Subsidiaries
|
|
Filed herewith
|
|
|
|
|
|
|
23.1
|
|
|
Consent of PricewaterhouseCoopers LLP
|
|
Filed herewith
|
|
|
|
|
|
|
23.2
|
|
|
Consent of RSM US LLP
|
|
Filed herewith
|
|
|
|
|
|
|
31.1
|
|
|
Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
Filed herewith
|
|
|
|
|
|
|
31.2
|
|
|
Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
Filed herewith
|
|
|
|
|
|
|
32
|
|
|
Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
|
Filed herewith
|
|
|
|
|
|
|
99.1
|
|
|
Financial statements of the Ritz-Carlton Bacara, Santa Barbara Hotel
|
|
Filed herewith
|
|
|
|
|
|
|
101.INS
|
|
|
XBRL Instance Document
|
|
Filed herewith
|
|
|
|
|
|
|
101.SCH
|
|
|
XBRL Taxonomy Extension Schema Document
|
|
Filed herewith
|
|
|
|
|
|
|
101.CAL
|
|
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
Filed herewith
|
|
|
|
|
|
|
101.DEF
|
|
|
XBRL Taxonomy Extension Definition Linkbase Document
|
|
Filed herewith
|
|
|
|
|
|
|
101.LAB
|
|
|
XBRL Taxonomy Extension Label Linkbase Document
|
|
Filed herewith
|
|
|
|
|
|
|
101.PRE
|
|
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
|
Filed herewith
|
|
|
|
Carey Watermark Investors 2 Incorporated
|
Date:
|
March 12, 2020
|
|
|
|
|
By:
|
/s/ Michael G. Medzigian
|
|
|
|
Michael G. Medzigian
|
|
|
|
Chief Executive Officer
|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
/s/ Michael G. Medzigian
|
|
Chief Executive Officer and Director
|
|
March 12, 2020
|
Michael G. Medzigian
|
|
(Principal Executive Officer)
|
|
|
|
|
|
|
|
/s/ Mallika Sinha
|
|
Chief Financial Officer
|
|
March 12, 2020
|
Mallika Sinha
|
|
(Principal Financial Officer)
|
|
|
|
|
|
|
|
/s/ Noah K. Carter
|
|
Chief Accounting Officer
|
|
March 12, 2020
|
Noah K. Carter
|
|
(Principal Accounting Officer)
|
|
|
|
|
|
|
|
/s/ Jason E. Fox
|
|
Chairman of the Board and Director
|
|
March 12, 2020
|
Jason E. Fox
|
|
|
|
|
|
|
|
|
|
/s/ Katherine G. Lugar
|
|
Director
|
|
March 12, 2020
|
Katherine G. Lugar
|
|
|
|
|
|
|
|
|
|
/s/ Robert E. Parsons, Jr.
|
|
Director
|
|
March 12, 2020
|
Robert E. Parsons, Jr.
|
|
|
|
|
|
|
|
|
|
/s/ William H. Reynolds, Jr.
|
|
Director
|
|
March 12, 2020
|
William H. Reynolds, Jr.
|
|
|
|
|
|
|
|
|
|
Exhibit No.
|
|
|
Description
|
|
Method of Filing
|
2.1
|
|
|
Agreement and Plan of Merger, dated as of October 22, 2019, among Carey Watermark Investors Incorporated, Carey Watermark Investors 2 Incorporated, and Apex Merger Sub LLC.
|
|
|
|
|
|
|
|
|
2.2
|
|
|
Internalization Agreement, dated as of October 22, 2019, among Carey Watermark Investors Incorporated, CWI OP, LP, Carey Watermark Investors 2 Incorporated, CWI 2 OP, LP, W. P. Carey Inc., Carey Watermark Holdings, LLC, CLA Holdings, LLC, Carey REIT II, Inc., WPC Holdco LLC, Carey Watermark Holdings 2, LLC, Carey Lodging Advisors, LLC, Watermark Capital Partners, LLC, CWA, LLC, and CWA 2, LLC.
|
|
|
|
|
|
|
|
|
3.1
|
|
|
Second Articles of Amendment and Restatement of Carey Watermark Investors 2 Incorporated
|
|
|
|
|
|
|
|
|
3.2
|
|
|
Amended and Restated Bylaws of Carey Watermark Investors 2 Incorporated
|
|
|
|
|
|
|
|
|
4.1
|
|
|
Amended and Restated Distribution Reinvestment Plan
|
|
|
|
|
|
|
|
|
4.2
|
|
|
Form of Notice to Stockholder
|
|
|
|
|
|
|
|
|
4.3
|
|
|
Description of Securities under Section 12 of the Exchange Act
|
|
|
|
|
|
|
|
|
10.1
|
|
|
Advisory Agreement dated February 9, 2015, between Carey Watermark Investors 2 Incorporated, CWI 2 OP, LP, and Carey Lodging Advisors, LLC
|
|
|
|
|
|
|
|
|
10.2
|
|
|
Subadvisory Agreement dated February 9, 2015 between Carey Lodging Advisors, LLC, and CWA 2, LLC
|
|
|
|
|
|
|
|
|
10.3
|
|
|
Agreement of Limited Partnership of CWI 2 OP, LP dated as of February 9, 2015, by and among Carey Watermark Investors 2 Incorporated and Carey Watermark Holdings 2, LLC
|
|
|
|
|
|
|
|
|
10.4
|
|
|
2015 Equity Incentive Plan
|
|
|
|
|
|
|
|
|
10.5
|
|
|
Indemnification Agreement dated February 9, 2015, between Carey Watermark Investors 2 Incorporated and CWA2, LLC
|
|
|
|
|
|
|
|
|
10.6
|
|
|
Form of Indemnification Agreement between Carey Watermark Investors 2 Incorporated and its directors and executive officers
|
|
|
|
|
|
|
|
|
10.7
|
|
|
Amended and Restated Limited Liability Company Agreement of CWI Sawgrass Holdings, LLC dated April 1, 2015
|
|
|
|
|
|
|
|
|
10.8
|
|
|
First Amendment to Advisory Agreement, dated as of June 30, 2015, by and among Carey Watermark Investors 2 Incorporated, CWI 2 OP, LP and Carey Lodging Advisors, LLC.
|
|
|
|
|
|
|
|
Exhibit No.
|
|
|
Description
|
|
Method of Filing
|
10.9
|
|
|
Amended and Restated Limited Liability Company Operating Agreement of CWI Key Biscayne Hotel, LLC, by and between CWI OP, LP and CWI 2 OP, LP dated as of May 29, 2015
|
|
|
|
|
|
|
|
|
10.10
|
|
|
Second Amendment to Advisory Agreement, dated as of June 13, 2017, by and among Carey Watermark Investors 2 Incorporated, CWI 2 OP, LP and Carey Lodging Advisors, LLC
|
|
|
|
|
|
|
|
|
10.11
|
|
|
Payment Guaranty, between W.P. Carey Inc. as Lender, and Carey Watermark Investors 2 Inc. as Guarantor, dated as of October 19, 2017
|
|
|
|
|
|
|
|
|
10.12
|
|
|
Pledge and Security Agreement between W.P. Carey Inc. as Lender, and CWI 2 OP, LP as Pledgor, dated October 19, 2017
|
|
|
|
|
|
|
|
|
10.13
|
|
|
Promissory Note, between W.P. Carey Inc. as Lender, and CWI 2 OP, LP as Borrower, dated as of October 19, 2017
|
|
|
|
|
|
|
|
|
10.14
|
|
|
First Amendment to the Loan Agreement, between W. P. Carey, as Lender, and CWI 2 OP, LP, as Borrower, effective September 30, 2018
|
|
|
|
|
|
|
|
|
10.15
|
|
|
Commitment Agreement, dated as of October 1, 2019, among Watermark Capital Partners, LLC, Carey Watermark Investors Incorporated, Carey Watermark Investors 2 Incorporated, and Michael Medzigian.
|
|
|
|
|
|
|
|
|
10.16
|
|
|
Second Amendment of the Loan Agreement between W. P. Carey, as Lender, and CWI 2 OP LP, as Borrower, effective September 30, 2019
|
|
|
|
|
|
|
|
|
10.17
|
|
|
Third Amendment of the Loan Agreement between W. P. Carey, as Lender, and CWI 2 OP LP, as Borrower, effective January 16, 2020
|
|
|
|
|
|
|
|
|
10.18
|
|
|
Transition Services Agreement, dated as of October 22, 2019, between Watermark Capital Partners, LLC, and Carey Watermark Investors 2 Incorporated.
|
|
|
|
|
|
|
|
|
10.19
|
|
|
Transition Services Agreement, dated as of October 22, 2019, between W. P. Carey Inc., and Carey Watermark Investors 2 Incorporated.
|
|
|
|
|
|
|
|
|
10.20
|
|
|
Employment Agreement, dated as of October 22, 2019, between Carey Watermark Investors 2 Incorporated and Michael G. Medzigian.
|
|
Exhibit No.
|
|
|
Description
|
|
Method of Filing
|
21.1
|
|
|
List of Registrant Subsidiaries
|
|
|
|
|
|
|
|
|
23.1
|
|
|
Consent of PricewaterhouseCoopers LLP
|
|
|
|
|
|
|
|
|
23.2
|
|
|
Consent of RSM US LLP
|
|
|
|
|
|
|
|
|
31.1
|
|
|
Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
|
|
|
|
|
|
|
31.2
|
|
|
Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
|
|
|
|
|
|
|
32
|
|
|
Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
|
|
|
|
|
|
|
|
99.1
|
|
|
Financial statements of the Ritz-Carlton Bacara, Santa Barbara Hotel
|
|
|
|
|
|
|
|
|
101.INS
|
|
|
XBRL Instance Document
|
|
Filed herewith
|
|
|
|
|
|
|
101.SCH
|
|
|
XBRL Taxonomy Extension Schema Document
|
|
Filed herewith
|
|
|
|
|
|
|
101.CAL
|
|
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
Filed herewith
|
|
|
|
|
|
|
101.DEF
|
|
|
XBRL Taxonomy Extension Definition Linkbase Document
|
|
Filed herewith
|
|
|
|
|
|
|
101.LAB
|
|
|
XBRL Taxonomy Extension Label Linkbase Document
|
|
Filed herewith
|
|
|
|
|
|
|
101.PRE
|
|
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
|
Filed herewith
|
•
|
one-tenth or more but less than one-third,
|
•
|
one-third or more but less than a majority, or
|
•
|
a majority or more of all voting power.
|
•
|
any person who beneficially owns 10% or more of the voting power of the corporation's outstanding voting stock; or
|
•
|
an affiliate or associate of the corporation who, at any time within the two-year period prior to the date in question, was the beneficial owner of ten percent or more of the voting power of the then outstanding stock of the corporation.
|
•
|
80% of the votes entitled to be cast by holders of outstanding shares of voting stock of the corporation; and
|
•
|
two-thirds of the votes entitled to be cast by holders of voting stock of the corporation other than voting shares held by the interested stockholder with whom or with whose affiliate the business combination is to be effected or held by an affiliate or associate of the interested stockholder.
|
•
|
a classified board,
|
•
|
a two-thirds vote requirement for removing a director,
|
•
|
a requirement that the number of directors be fixed only by vote of the directors,
|
•
|
a requirement that a vacancy on the board be filled only by the remaining directors and for the remainder of the full term of the class of directors in which the vacancy occurred, and
|
•
|
a majority requirement for the calling of a special meeting of stockholders.
|
LENDER:
|
|
|
|
WPC HOLDCO LLC, a Maryland limited
|
|
liability company
|
|
|
|
By: W. P. Carey Inc., a Maryland corporation,
|
|
ts sole member
|
|
|
|
By:
|
/s/ ToniAnn Sanzone
|
|
Name: ToniAnn Sanzone
|
|
Title: Chief Financial Officer
|
|
|
|
|
|
|
BORROWER:
|
|
|
|
CWI 2 OP, LP, a Delaware limited
|
|
partnership
|
|
|
|
By:
|
Carey Watermark Investors
|
|
Incorporated, its general partner
|
|
|
By:
|
/s/ Mallika Sinha
|
|
Name: Mallika Sinha
|
|
Title: Chief Financial Officer
|
LENDER:
|
|
|
|
WPC HOLDCO LLC, a Maryland limited
liability company
|
|
|
|
By:
|
W. P. Carey Inc., a Maryland corporation,
its sole member
|
|
|
By:
|
/s/ ToniAnn Sanzone
|
|
Name: ToniAnn Sanzone
|
|
Title: Chief Financial Officer
|
|
|
|
|
BORROWER:
|
|
|
|
CWI 2 OP, LP, a Delaware limited partnership
|
|
|
|
By:
|
Carey Watermark Investors
Incorporated, its general partner
|
|
|
By:
|
/s/ Mallika Sinha
|
|
Name: Mallika Sinha
|
|
Title: Chief Financial Officer
|
Name of Subsidiary
|
|
Ownership
|
|
State or Country of Incorporation
|
|
Arlington 2 Hotel Operator, LLC
|
|
100
|
%
|
|
Delaware
|
Atlanta Peachtree 2 Hotel Mezzanine Operator, LLC
|
|
100
|
%
|
|
Delaware
|
Atlanta Peachtree 2 Hotel Operator, LLC
|
|
100
|
%
|
|
Delaware
|
Bellevue 2 Hotel Operator, Inc.
|
|
95
|
%
|
|
Delaware
|
Charlotte 2 Hotel Operator, LLC
|
|
100
|
%
|
|
Delaware
|
CWI 2 Arlington Hotel, LLC
|
|
100
|
%
|
|
Delaware
|
CWI 2 Atlanta Peachtree Hotel, LLC
|
|
100
|
%
|
|
Delaware
|
CWI 2 Atlanta Peachtree Hotel Mezzanine Borrower, LLC
|
|
100
|
%
|
|
Delaware
|
CWI 2 Bellevue Hotel, LLC
|
|
95
|
%
|
|
Delaware
|
CWI 2 Charlotte Hotel, LP
|
|
100
|
%
|
|
Delaware
|
CWI 2 Charlotte Hotel GP, LLC
|
|
100
|
%
|
|
Delaware
|
CWI 2 Denver Downtown Hotel, LLC
|
|
100
|
%
|
|
Delaware
|
CWI 2 Hotel Operator, Inc.
|
|
100
|
%
|
|
Delaware
|
CWI 2 La Jolla Hotel GP, LLC
|
|
100
|
%
|
|
Delaware
|
CWI 2 La Jolla Hotel, LP
|
|
100
|
%
|
|
Delaware
|
CWI 2 OP, LP
|
|
100
|
%
|
|
Delaware
|
CWI 2 San Francisco Hotel GP, LLC
|
|
100
|
%
|
|
Delaware
|
CWI 2 San Francisco Hotel, LP
|
|
100
|
%
|
|
Delaware
|
CWI 2 San Jose Hotel GP, LLC
|
|
100
|
%
|
|
Delaware
|
CWI 2 San Jose Hotel, LP
|
|
100
|
%
|
|
Delaware
|
CWI 2 Santa Barbara Hotel GP, LLC
|
|
100
|
%
|
|
Delaware
|
CWI 2 Santa Barbara Hotel, LP
|
|
100
|
%
|
|
Delaware
|
CWI 2 Santa Barbara Mezz GP, LLC
|
|
100
|
%
|
|
Delaware
|
CWI 2 Santa Barbara Mezz LP
|
|
100
|
%
|
|
Delaware
|
CWI Key Biscayne Hotel, LLC
|
|
29
|
%
|
|
Delaware
|
CWI Nashville Downtown Hotel, LLC
|
|
100
|
%
|
|
Delaware
|
CWI Sawgrass Holdings, LLC
|
|
50
|
%
|
|
Delaware
|
CWI Sawgrass Hotel, LLC
|
|
50
|
%
|
|
Delaware
|
CWI Santa Barbara Hotel GP, LLC
|
|
60
|
%
|
|
Delaware
|
CWI Santa Barbara Hotel, LP
|
|
60
|
%
|
|
Delaware
|
Denver Downtown 2 Hotel Operator, LLC
|
|
100
|
%
|
|
Delaware
|
GB Key Biscayne Holdings, LLC
|
|
19
|
%
|
|
Delaware
|
GB/JT Hotel Partners, L.P.
|
|
19
|
%
|
|
Delaware
|
GB/JT Management, LLC
|
|
19
|
%
|
|
Delaware
|
Key Biscayne Hotel Operator, Inc.
|
|
19
|
%
|
|
Delaware
|
La Jolla 2 Hotel Operator, LLC
|
|
100
|
%
|
|
Delaware
|
Nashville Downtown 2 Hotel Operator, LLC
|
|
100
|
%
|
|
Delaware
|
San Francisco 2 Hotel Operator, LLC
|
|
100
|
%
|
|
Delaware
|
San Jose 2 Hotel Operator, LLC
|
|
100
|
%
|
|
Delaware
|
Santa Barbara Hotel Operator, Inc.
|
|
60
|
%
|
|
Delaware
|
Sawgrass Hotel Operator, Inc.
|
|
50
|
%
|
|
Delaware
|
1.
|
I have reviewed this Annual Report on Form 10-K of Carey Watermark Investors 2 Incorporated;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an Annual Report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
1.
|
I have reviewed this Annual Report on Form 10-K of Carey Watermark Investors 2 Incorporated;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an Annual Report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
1.
|
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
2.
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Carey Watermark Investors 2 Incorporated.
|
|
|
|
|
|
|
|
(Unaudited)
|
|||||||
|
2019
|
|
2018
|
|
2017
|
|||||||
|
|
|
|
|
|
|||||||
Cash and cash equivalents
|
$
|
1,668,021
|
|
|
$
|
1,520,097
|
|
|
$
|
7,650,341
|
|
|
Restricted cash:
|
|
|
|
|
|
|||||||
Escrow related to capital expenditures
|
2,222,917
|
|
|
1,357,681
|
|
|
4,193,058
|
|
||||
Escrow related to property taxes and insurance
|
971,517
|
|
|
483,692
|
|
|
219,309
|
|
||||
|
3,194,434
|
|
|
1,841,373
|
|
|
4,412,367
|
|
||||
Total cash and cash equivalents and restricted cash shown in the combined statements of cash flows
|
$
|
4,862,455
|
|
|
$
|
3,361,470
|
|
|
$
|
12,062,708
|
|
|
|
|
2019
|
|
2018
|
||||
Land
|
$
|
80,624,968
|
|
|
$
|
80,624,968
|
|
Buildings and improvements
|
277,451,494
|
|
|
267,022,670
|
|
||
Furniture, fixtures and equipment
|
26,264,035
|
|
|
22,683,452
|
|
||
Construction in progress
|
723,863
|
|
|
6,170,243
|
|
||
|
385,064,360
|
|
|
376,501,333
|
|
||
Less accumulated depreciation
|
(26,340,882
|
)
|
|
(14,115,555
|
)
|
||
Investment in hotel property, net
|
$
|
358,723,478
|
|
|
$
|
362,385,778
|
|
|
|
|
|
|
|
December 31, 2019
|
|
December 31, 2018
|
||||||||||||||||||||
|
Amortization Period (Years)
|
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Net Carrying
Amount
|
|
Gross Carrying Amount
|
|
Accumulated Amortization
|
|
Net Carrying Amount
|
||||||||||||
Tradename
|
10
|
|
$
|
10,548,780
|
|
|
$
|
(2,384,314
|
)
|
|
$
|
8,164,466
|
|
|
$
|
10,548,780
|
|
|
$
|
(1,329,436
|
)
|
|
$
|
9,219,344
|
|
Customer relationships
|
10
|
|
758,091
|
|
|
(171,349
|
)
|
|
586,742
|
|
|
758,091
|
|
|
(95,540
|
)
|
|
662,551
|
|
||||||
Total intangible assets, net
|
|
|
$
|
11,306,871
|
|
|
$
|
(2,555,663
|
)
|
|
$
|
8,751,208
|
|
|
$
|
11,306,871
|
|
|
$
|
(1,424,976
|
)
|
|
$
|
9,881,895
|
|
|
|
|
Customer
|
|
|
||||||
|
Tradename
|
|
Relationships
|
|
Total
|
||||||
|
|
|
|
|
|
||||||
2020
|
$
|
1,054,878
|
|
|
$
|
75,809
|
|
|
$
|
1,130,687
|
|
2021
|
1,054,878
|
|
|
75,809
|
|
|
1,130,687
|
|
|||
2022
|
1,054,878
|
|
|
75,809
|
|
|
1,130,687
|
|
|||
2023
|
1,054,878
|
|
|
75,809
|
|
|
1,130,687
|
|
|||
2024
|
1,054,878
|
|
|
75,809
|
|
|
1,130,687
|
|
|||
Thereafter
|
2,890,076
|
|
|
207,697
|
|
|
3,097,773
|
|
|||
Total
|
$
|
8,164,466
|
|
|
$
|
586,742
|
|
|
$
|
8,751,208
|
|
|
|
|
|
|
|
|
(Unaudited)
|
||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Federal
|
|
|
|
|
|
||||||
Current
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Deferred
|
—
|
|
|
—
|
|
|
162,548
|
|
|||
|
—
|
|
|
—
|
|
|
162,548
|
|
|||
State
|
|
|
|
|
|
||||||
Current
|
165,569
|
|
|
—
|
|
|
—
|
|
|||
Deferred
|
—
|
|
|
—
|
|
|
45,036
|
|
|||
|
165,569
|
|
|
—
|
|
|
45,036
|
|
|||
|
|
|
|
|
|
||||||
Total provision
|
$
|
165,569
|
|
|
$
|
—
|
|
|
$
|
207,584
|
|
|
2019
|
|
2018
|
||||
Deferred tax assets:
|
|
|
|
||||
Deferred tax asset
|
$
|
6,483,343
|
|
|
$
|
4,396,943
|
|
Valuation allowance
|
(6,483,343
|
)
|
|
(4,396,943
|
)
|
||
|
|
|
|
||||
Net deferred tax assets
|
$
|
—
|
|
|
$
|
—
|
|