Sunstone Hotel Investors Inc
For the period ended Jun 30, 2024. Filed Aug 7, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Aug 7, 2024
SHO$12.52+1.4%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-05-06.
0001558370-24-006777
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-08-07.
0001558370-24-011285
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 81 previous paragraphs and 92 current paragraphs.
34 unchanged; 39 reworded; 13 added; 5 removed; 3 previous and 6 current paragraphs rearranged.
Tables are not compared: 79 previous and 115 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (13)
Current report
For the six months ended June 30, 2024, room revenue decreased $38.7 million, or 11.9%, as compared to the six months ended June 30, 2023 as follows:
Current report
For the first six months of 2024, food and beverage revenue decreased $16.9 million, or 11.3%, as compared to the first six months of 2023, as follows:
Current report
For the first six months of 2024, other operating revenue increased $0.7 million, or 1.7%, as compared to the first six months of 2023 as follows:
Current report
For the first six months of 2024, hotel operating expenses decreased $20.8 million, or 6.9%, as compared to the first six months of 2023 as follows:
Current report
For the first six months of 2024, other property-level expenses decreased $7.9 million, or 12.4%, as compared to the first six months of 2023 as follows:
Current report
For the first six months of 2024, depreciation and amortization expense decreased $4.6 million, or 7.1%, as compared to the first six months of 2023 as follows:
Current report
During the first six months of 2024 and 2023, we recognized interest income of $8.6 and $1.5 million, respectively. Interest income increased in the first six months of 2024 as compared to the first six months of 2023 due to increases in our cash balances as well as increased interest rates. In addition, during the first six months of 2024 and 2023, we recognized property insurance recoveries of $0.3 million and $3.7 million related to fire damage at the Hilton San Diego Bayfront and Hurricane Ida-related property damage at the Hilton New Orleans St. Charles, respectively.
Current report
Interest expense increased $3.5 million, or 37.6%, and $0.7 million, or 3.0%, in the second quarter and first six months of 2024, respectively, as compared to the same periods in 2023 as follows:
Current report
Capitalized interest caused interest expense to decrease $0.2 million for both the second quarter and first six months of 2024 as compared to the same periods in 2023. During the second quarter of 2024, we capitalized $0.2 million of interest expense related to the extensive renovation work at The Confidante Miami Beach as it transitions to Andaz Miami Beach.
Current report
In the second quarter and first six months of 2023, we recognized current income tax provisions of $0.8 million and $1.2 million, respectively, resulting from current state and federal income tax expenses.
Current report
During the first six months of 2024, we paid $229.3 million to acquire the Hyatt Regency San Antonio Riverwalk, including closing costs and prorations and we invested $68.7 million for renovations and additions to our portfolio and other assets. These cash outflows were slightly offset by $0.2 million in property insurance proceeds received related to fire damage at the Hilton San Diego Bayfront.
Current report
During the first six months of 2023, we paid an additional $0.3 million to true-up the total acquisition cost of the outside 25.0% equity interest in the entity that owns the Hilton San Diego Bayfront and $0.4 million in common stock offering costs related to our shelf registration statement. In addition, we paid $21.5 million to repurchase 2,266,384 shares of our outstanding common stock, $3.3 million to repurchase common stock to satisfy the tax obligations in connection with the vesting of restricted common stock issued to employees, and $27.5 million in dividends and distributions to our preferred and common stockholders. We also entered into a term loan agreement, receiving $225.0 million in proceeds and paying $2.3 million in related deferred financing costs. We utilized the proceeds received from the term loan to repay the $220.0 million loan secured by the Hilton San Diego Bayfront. We also paid $1.0 million in scheduled principal payments on our loan secured by the JW Marriott New Orleans.
Current report
Accounting for the acquisition of a hotel property or other entity requires either allocating the purchase price to the assets acquired and the liabilities assumed in the transaction at their respective relative fair values for an asset acquisition or recording the assets and liabilities at their estimated fair values with any excess consideration above net assets going to goodwill for a business combination. The most difficult estimations of individual fair values are those involving long-lived assets, such as property, equipment and intangible assets, together with any finance or operating lease right-of-use assets and their related obligations. When we acquire a hotel property or other entity, we use all available information to make these fair value determinations, including discounted cash flow analyses, market comparable data and replacement cost data. In addition, we make significant estimations regarding capitalization rates, discount rates, average daily rates, revenue growth rates and occupancy. We also engage independent valuation specialists to assist in the fair value determinations of the long-lived assets acquired and the liabilities assumed. The determination of fair value is subjective and is based in part on assumptions and estimates that could differ materially from actual results in future periods.
Removed paragraphs (5)
Previous report
amortization (excluding amortization of deferred financing costs and right-of-use assets and obligations); and any real estate-related impairment losses; and
Previous report
Interest expense decreased $2.8 million, or 20.2%, in the first quarter of 2024 as compared to the first quarter of 2023 as follows:
Previous report
items may include: lawsuit settlement costs; the write-off of development costs associated with abandoned projects; property-level restructuring, severance, pre-opening, and management transition costs; debt resolution costs; lease terminations; property insurance restoration proceeds or uninsured losses; and other nonrecurring identified adjustments.
Previous report
historical cost accounting and do not reflect the actual rent amounts due to the respective lessors or the underlying performance of our hotels.
Previous report
subject to federal corporate income tax on that portion of our taxable income that is currently distributed to stockholders. We are subject to certain state and local taxes on our income and property, and to federal income and excise taxes on our undistributed taxable income. In addition, our wholly owned TRS, which leases our hotels from the Operating Partnership, is subject to federal and state income taxes. We account for income taxes using the asset and liability method. Under this method, deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to the differences between the financial statement carrying amounts of existing assets and liabilities and their respective income tax bases, and for net operating loss, capital loss and tax credit carryforwards. The deferred tax assets and liabilities are measured using the enacted income tax rates in effect for the year in which those temporary differences are expected to be realized or settled. The effect on the deferred tax assets and liabilities from a change in tax rates is recognized in earnings in the period when the new rate is enacted. However, deferred tax assets are recognized only to the extent that it is more likely than not that they will be realized based on consideration of all available evidence, including the future reversals of existing taxable temporary differences, future projected taxable income and tax planning strategies. Valuation allowances are provided if, based upon the weight of the available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized.
Reworded paragraphs (39)
Previous wording
We own hotels in urban and resort destinations that benefit from significant barriers to entry by competitors and diverse economic drivers. As of March 31, 2024, we owned 14 hotels (the “14 Hotels”), which average 477 rooms in size. All of our hotels are operated under nationally recognized brands, except the Oceans Edge Resort & Marina, which has established itself in a resort destination market.
Current wording
We own hotels in urban and resort destinations that benefit from significant barriers to entry by competitors and diverse economic drivers. As of June 30, 2024, we owned 15 hotels (the “15 Hotels”), which average 484 rooms in size. All of our hotels are operated under nationally recognized brands, except the Oceans Edge Resort & Marina, which has established itself in a resort destination market.
Previous wording
Room revenue. Room revenue decreased $16.6 million, or 10.9%, in the first quarter of 2024 as compared to the first quarter of 2023 as follows:
Current wording
Room revenue. Room revenue decreased $22.1 million, or 12.7%, in the second quarter of 2024 as compared to the second quarter of 2023 as follows:
Previous wording
Food and beverage revenue*.* Food and beverage revenue decreased $9.5 million, or 13.4%, in the first quarter of 2024 as compared to the first quarter of 2023, as follows:
Current wording
Food and beverage revenue*.* Food and beverage revenue decreased $7.4 million, or 9.4%, in the second quarter of 2024 as compared to the second quarter of 2023, as follows:
Previous wording
Other operating revenue. Other operating revenue decreased $0.2 million, or 0.9%, in the first quarter of 2024 as compared to the first quarter of 2023 as follows:
Current wording
Other operating revenue. Other operating revenue increased $0.9 million, or 3.8%, in the second quarter of 2024 as compared to the second quarter of 2023 as follows:
Previous wording
Hotel operating expenses*.*Hotel operating expenses, which are comprised of room, food and beverage, advertising and promotion, repairs and maintenance, utilities, franchise costs, property tax, ground lease and insurance, and other hotel operating expenses decreased $10.3 million, or 7.1%, in the first quarter of 2024 as compared to the first quarter of 2023 as follows:
Current wording
Hotel operating expenses*.*Hotel operating expenses, which are comprised of room, food and beverage, advertising and promotion, repairs and maintenance, utilities, franchise costs, property tax, ground lease and insurance, and other hotel operating expenses decreased $10.5 million, or 6.8%, in the second quarter of 2024 as compared to the second quarter of 2023 as follows:
Previous wording
Other property-level expenses*.*Other property-level expenses decreased $4.2 million, or 13.1%, in the first quarter of 2024 as compared to the first quarter of 2023 as follows:
Current wording
Other property-level expenses*.*Other property-level expenses decreased $3.7 million, or 11.7%, in the second quarter of 2024 as compared to the second quarter of 2023 as follows:
Previous wording
Corporate overhead expense*.*Corporate overhead expense decreased $1.0 million, or 11.2%, in the first quarter of 2024 as compared to the first quarter of 2023, primarily due to decreased entity-level state franchise and minimum taxes, payroll and related expenses and due diligence expenses. These decreased expenses were partially offset by increased deferred stock amortization expense and professional fees.
Current wording
For the first six months of 2024, corporate overhead expense decreased $1.2 million, or 7.0%, as compared to the first six months of 2023, primarily due to decreased entity-level state franchise and minimum taxes, payroll and related expenses, and due diligence expenses. These decreased expenses were partially offset by increased professional fees and deferred stock amortization expense.
Previous wording
Depreciation and amortization expense*.*Depreciation and amortization expense decreased $3.3 million, or 10.2%, in the first quarter of 2024 as compared to the first quarter of 2023 as follows:
Current wording
Depreciation and amortization expense*.*Depreciation and amortization expense decreased $1.3 million, or 4.0%, in the second quarter of 2024 as compared to the second quarter of 2023 as follows:
Previous wording
Interest and other income*.*Interest and other income totaled $5.5 million and $0.5 million in the first quarters of 2024 and 2023, respectively.
Current wording
Interest and other income*.*Interest and other income totaled $3.5 million and $4.6 million in the second quarters of 2024 and 2023, respectively, and $9.0 million and $5.2 million in the first six months of 2024 and 2023, respectively.
Previous wording
During the first quarters of 2024 and 2023, we recognized interest income of $5.5 million and $0.5 million, respectively. Interest income increased in the first quarter of 2024 as compared to the first quarter of 2023 due to increases in our cash balances as well as increased interest rates.
Current wording
During the second quarters of 2024 and 2023, we recognized interest income of $3.2 million and $0.9 million, respectively. Interest income increased in the second quarter of 2024 as compared to the second quarter of 2023 due to increases in our cash balances as well as increased interest rates. In addition, during the second quarters of 2024 and 2023, we recognized property insurance recoveries of $0.3 million and $3.7 million related to fire damage at the Hilton San Diego Bayfront and Hurricane Ida-related property damage at the Hilton New Orleans St. Charles, respectively.
Previous wording
Interest expense on our debt increased $0.9 million in the first quarter of 2024 as compared to the first quarter of 2023, primarily due to increased interest on our variable rate debt and our draw of the $225.0 million available under our third term loan in May 2023. These increases were partially offset due to our repayment of the $220.0 million loan secured by the Hilton San Diego Bayfront in May 2023.
Current wording
Interest expense on our debt increased nominally and $0.9 million in the second quarter and first six months of 2024 as compared to the same periods in 2023, respectively, primarily due to increased interest on our variable rate debt and our draw of the $225.0 million available under our third term loan in May 2023, which was partially offset due to our repayment of the $220.0 million loan secured by the Hilton San Diego Bayfront in May 2023.
Previous wording
Noncash changes in the fair market value of our derivatives caused interest expense to decrease $3.9 million in the first quarter of 2024 as compared to the first quarter of 2023.
Current wording
Noncash changes in the fair market value of our derivatives caused interest expense to increase $3.5 million and decrease $0.4 million in the second quarter and first six months of 2024 as compared to the same periods in 2023, respectively.
Previous wording
The amortization of deferred financing costs caused interest expense to increase $0.2 million in the first quarter of 2024 as compared to the first quarter of 2023 due to costs incurred on our third term loan.
Current wording
The amortization of deferred financing costs caused interest expense to increase $0.1 million and $0.3 million in the second quarter and first six months of 2024 as compared to the same periods in 2023, respectively, due to costs incurred on our third term loan.
Previous wording
Our weighted average interest rate per annum, including our variable rate debt obligations, was approximately 5.8% and 5.6% at March 31, 2024 and 2023, respectively. Approximately 51.1% and 51.6% of our outstanding notes payable had fixed interest rates or had been swapped to fixed interest rates at March 31, 2024 and 2023, respectively.
Current wording
Our weighted average interest rate per annum, including our variable rate debt obligations and excluding capitalized interest, was approximately 5.8% and 5.9% at June 30, 2024 and 2023, respectively. Approximately 51.1% and 51.2% of our outstanding notes payable had fixed interest rates or had been swapped to fixed interest rates at June 30, 2024 and 2023, respectively.
Previous wording
Gain on sale of assets, net. Gain on sale of assets, net totaled $0.5 million and zero for the first quarters of 2024 and 2023, respectively. In the first quarter of 2024, we recognized an additional $0.5 million net gain related to a contingency resolution at a hotel sold in a prior year.
Current wording
Gain on sale of assets, net. Gain on sale of assets, net totaled zero and $0.5 million for the second quarter and first six months of 2024, respectively, and zero for both the second quarter and first six months of 2023. In the first quarter of 2024, we recognized an additional $0.5 million net gain related to a contingency resolution at a hotel sold in a prior year.
Previous wording
Gain on extinguishment of debt. Gain on extinguishment of debt totaled $21,000 and $9.9 million for the first quarters of 2024 and 2023, respectively. In the first quarter of 2024, we recognized $21,000 associated with our assignment of the Hilton Times Square to the hotel’s mortgage holder in 2020 due to reassessments of the remaining potential employee-related obligations currently held in escrow.
Current wording
Gain on extinguishment of debt. Gain on extinguishment of debt totaled $38,000 and $12,000 for the second quarters of 2024 and 2023, respectively, both of which were related to potential employee-related obligations held in escrow associated with our assignment of a hotel to the hotel’s mortgage holder in 2020. In the second quarter of 2024, the escrow agreement was terminated and we recorded a gain of $38,000 due to the release of the remaining potential employee-related obligations in conjunction with the termination. In the second quarter of 2023, we recorded a gain of $12,000 associated with reassessments of the remaining potential employee-related obligations held in escrow.
Previous wording
In the first quarter of 2023 we recognized a gain of $9.9 million, comprised of $9.8 million from the relief of the majority of the Hilton Times Square potential employee-related obligations, with the funds released to us from escrow, and $0.1 million due to reassessments of the remaining potential employee-related obligations currently held in escrow.
Current wording
For the first six months of 2024 and 2023, gain on extinguishment of debt totaled $0.1 million and $9.9 million, respectively. During the first six months of 2024, we recognized $21,000 due to reassessments of the remaining potential employee-related obligations held in escrow, and $38,000 due to the termination of the escrow agreement as noted above in the discussion regarding the second quarter of 2024. During the first six months of 2023 we recognized a gain of $9.9 million, comprised of $9.8 million from the relief of the majority of the potential employee-related obligations, with the funds released to us from escrow, and $0.1 million due to reassessments of the remaining potential employee-related obligations held in escrow.
Previous wording
Income tax benefit (provision), net*.* We lease our hotels to the TRS Lessee and its subsidiaries, which are subject to federal and state income taxes. In addition, we and the Operating Partnership may also be subject to various state and local income taxes.
Current wording
Income tax (provision) benefit, net*.* We lease our hotels to the TRS Lessee and its subsidiaries, which are subject to federal and state income taxes. In addition, we and the Operating Partnership may also be subject to various state and local income taxes.
Previous wording
In the first quarters of 2024 and 2023, we recognized a net current income tax benefit of $0.9 million and a current income tax provision of $0.4 million, respectively, resulting from current state and federal income tax expenses, net of any refunds.
Current wording
In the second quarter and first six months of 2024, we recognized a current income tax provision of $0.3 million and a net current income tax benefit of $0.6 million, respectively, resulting from current state and federal income tax expenses, net of any refunds.
Previous wording
rate equal to the Montage Healdsburg’s annual net operating income yield on our total investment in the resort. We expect the annual dividend rate will increase in the second half of 2024 to the greater of 4.5% or the rate equal to the Montage Healdsburg’s annual net operating income yield on our total investment in the resort.
Current wording
The Series G preferred stock initially accrued dividends at a rate equal to the Montage Healdsburg’s annual net operating income yield on our total investment in the resort. In January 2024, the annual dividend rate increased to the greater of 3.0% or the rate equal to the Montage Healdsburg’s annual net operating income yield on our total investment in the resort. Beginning with the third quarter of 2024, the annual dividend rate will increase to the greater of 4.5% or the rate equal to the Montage Healdsburg’s annual net operating income yield on our total investment in the resort.
Previous wording
Non-GAAP Financial Measures. We use the following “non-GAAP financial measures” that we believe are useful to investors as key supplemental measures of our operating performance: EBITDAre; Adjusted EBITDAre; FFO attributable to common stockholders; and Adjusted FFO attributable to common stockholders. These measures should not be considered in isolation or as a substitute for measures of performance in accordance with accounting principles generally accepted in the United States (“GAAP”). In addition, our calculation of these measures may not be comparable to other companies that do not define such terms exactly the same as the Company. These non-GAAP measures are used in addition to and in conjunction with results presented in accordance with GAAP. They should not be considered as alternatives to net income (loss), cash flow from operations, or any other operating performance measure prescribed by GAAP. These non-GAAP financial measures reflect additional ways of viewing our operations that we believe, when viewed with our GAAP results and the reconciliations to the corresponding GAAP financial measures, provide a more complete understanding of factors and trends affecting our business than could be obtained absent this disclosure. We strongly encourage investors to review our financial information in its entirety and not to rely on a single financial measure.
Current wording
as the Company. These non-GAAP measures are used in addition to and in conjunction with results presented in accordance with GAAP. They should not be considered as alternatives to net income (loss), cash flow from operations, or any other operating performance measure prescribed by GAAP. These non-GAAP financial measures reflect additional ways of viewing our operations that we believe, when viewed with our GAAP results and the reconciliations to the corresponding GAAP financial measures, provide a more complete understanding of factors and trends affecting our business than could be obtained absent this disclosure. We strongly encourage investors to review our financial information in its entirety and not to rely on a single financial measure.
Previous wording
The following table reconciles our unaudited net income to EBITDAre and Adjusted EBITDAre for the three months ended March 31, 2024 and 2023 (in thousands):
Current wording
The following table reconciles our unaudited net income to EBITDAre and Adjusted EBITDAre for the three and six months ended June 30, 2024 and 2023 (in thousands):
Previous wording
Adjusted EBITDAre decreased $5.5 million, or 9.2%, in the first quarter of 2024 as compared to the first quarter of 2023, due to the following:
Current wording
Adjusted EBITDAre decreased $11.5 million, or 13.6%, in the second quarter of 2024 as compared to the second quarter of 2023, and $17.1 million, or 11.8%, in the first six months of 2024 as compared to the first six months of 2023 primarily due to the following:
Previous wording
The following table reconciles our unaudited net income to FFO attributable to common stockholders and Adjusted FFO attributable to common stockholders for the three months ended March 31, 2024 and 2023 (in thousands):
Current wording
The following table reconciles our unaudited net income to FFO attributable to common stockholders and Adjusted FFO attributable to common stockholders for the three and six months ended June 30, 2024 and 2023 (in thousands):
Previous wording
Adjusted FFO attributable to common stockholders decreased $6.3 million, or 14.4%, in the first quarter of 2024 as compared to the first quarter of 2023 primarily due to the same reasons noted in the discussion above regarding Adjusted EBITDAre.
Current wording
Adjusted FFO attributable to common stockholders decreased $10.8 million, or 16.0%, and $17.1 million, or 15.3%, in the second quarter and first six months of 2024, respectively, as compared to the same periods in 2023 primarily due to the same reasons noted in the discussion above regarding Adjusted EBITDAre.
Previous wording
During the periods presented, our sources of cash included our operating activities and working capital. Our primary uses of cash were for capital expenditures for hotels and other assets, operating expenses, repurchases of our common stock, repayments of notes payable and dividends and distributions on our preferred and common stock. We cannot be certain that traditional sources of funds will be available in the future.
Current wording
During the periods presented, our sources of cash included our operating activities and working capital, as well as proceeds from our term loan and property insurance. Our primary uses of cash were for capital expenditures for hotels and other assets, an acquisition of a hotel, operating expenses, repurchases of our common stock, repayments of notes payable and dividends and distributions on our preferred and common stock. We cannot be certain that traditional sources of funds will be available in the future.
Previous wording
Operating activities*.* Our net cash provided by or used in operating activities fluctuates primarily as a result of changes in the net cash generated by our hotels, offset by the cash paid for corporate expenses. Our net cash provided by or used in operating activities may also be affected by changes in our portfolio resulting from hotel acquisitions, dispositions or renovations. Net cash provided by operating activities was $38.5 million in the first quarter of 2024 as compared to $47.2 million in the first quarter of 2023. The net decrease in cash provided by operating activities during the first quarter of 2024 as compared to the first quarter of 2023 was primarily due to decreases in operating cash at the Two Renovation Hotels, as well as decreases caused by our sale of the Boston Park Plaza and higher interest payments on our variable rate debt, partially offset by additional operating cash provided by the increase in travel demand benefiting our hotels.
Current wording
activities may also be affected by changes in our portfolio resulting from hotel acquisitions, dispositions or renovations. Net cash provided by operating activities was $93.3 million in the first six months of 2024 as compared to $107.0 million in the first six months of 2023. The net decrease in cash provided by operating activities during the first six months of 2024 as compared to the same period in 2023 was primarily due to decreases in operating cash at the Two Renovation Hotels, as well as decreases caused by our sale of the Boston Park Plaza and higher interest payments on our variable rate debt, partially offset by the acquisition of the Hyatt Regency San Antonio Riverwalk as well as additional operating cash provided by the increase in travel demand benefiting our hotels.
Previous wording
Investing activities. Our net cash provided by or used in investing activities fluctuates primarily as a result of acquisitions, dispositions and renovations of hotels and other assets. Net cash used in investing activities during the first quarter of 2024 as compared to the first quarter of 2023 was as follows (in thousands):
Current wording
Investing activities. Our net cash provided by or used in investing activities fluctuates primarily as a result of acquisitions, dispositions and renovations of hotels and other assets. Net cash used in investing activities during the first six months of 2024 as compared to the first six months of 2023 was as follows (in thousands):
Previous wording
During the first quarters of 2024 and 2023, we invested $27.7 million and $22.5 million, respectively, for renovations and additions to our portfolio and other assets.
Current wording
During the first six months of 2023, we invested $49.2 million for renovations and additions to our portfolio and other assets.
Previous wording
Financing activities. Our net cash provided by or used in financing activities fluctuates primarily as a result of our dividends and distributions paid, issuance and repurchase of common stock, issuance and repayment of notes payable and our credit facility, and issuance and redemption of other forms of capital, including preferred equity. Net cash used in financing activities during the first quarter of 2024 as compared to the first quarter of 2023 was as follows (in thousands):
Current wording
Financing activities. Our net cash provided by or used in financing activities fluctuates primarily as a result of our dividends and distributions paid, issuance and repurchase of common stock, issuance and repayment of notes payable and our credit facility, and issuance and redemption of other forms of capital, including preferred equity. Net cash used in financing activities during the first six months of 2024 as compared to the first six months of 2023 was as follows (in thousands):
Previous wording
During the first quarter of 2023, we paid $18.6 million to repurchase 1,964,923 shares of our outstanding common stock. We also paid $3.3 million to repurchase common stock to satisfy the tax obligations in connection with the vesting of restricted common stock issued to employees, $0.5 million in scheduled principal payments on our loan secured by the JW Marriott New Orleans and $14.0 million in dividends and distributions to our preferred and common stockholders.
Current wording
During the first six months of 2024, we paid $3.6 million to repurchase 359,008 shares of our outstanding common stock, $3.2 million to repurchase common stock to satisfy the tax obligations in connection with the vesting of restricted common stock issued to employees, $1.1 million in scheduled principal payments on our loan secured by the JW Marriott New Orleans and $47.2 million in dividends and distributions to our preferred and common stockholders.
Previous wording
Future. We expect our primary sources of cash will continue to be our working capital, credit facility, additional issuances of notes payable, dispositions of hotel properties and proceeds from offerings of common and preferred stock. However, there can be no assurance that our future asset sales, debt issuances or equity offerings will be successfully completed. As a result of potential increases in inflation rates and interest rates, as well as possible recessionary periods in the future, certain sources of capital may not be as readily available to us as they have in the past or may only be available at higher costs.
Current wording
Future. We expect our primary sources of cash will continue to be our operating activities, working capital, borrowing under our credit facility, additional issuances of notes payable, dispositions of hotel properties and proceeds from offerings of common and preferred stock. However, there can be no assurance that our future asset sales, debt issuances or equity offerings will be successfully
Previous wording
We expect our primary uses of cash to be for operating expenses, capital investments in our hotels, repayment of principal on our notes payable and credit facility, interest expense, repurchases of our common stock, distributions on our common stock, dividends on our preferred stock and acquisitions of hotels or interests in hotels, including the April 2024 purchase of the Hyatt Regency San Antonio Riverwalk for a contractual purchase price of $230.0 million.
Current wording
We expect our primary uses of cash to be for operating expenses, capital investments in our hotels, repayment of principal on our notes payable and credit facility, interest expense, repurchases of our common stock, distributions on our common stock, dividends on our preferred stock and acquisitions of hotels or interests in hotels.
Previous wording
Cash Balance. As of March 31, 2024, our unrestricted cash balance was $400.7 million. Following the purchase of the Hyatt Regency San Antonio Riverwalk in April 2024, our unrestricted pro forma cash balance will be $170.7 million. We believe that our current unrestricted cash balance and our ability to draw the $500.0 million capacity available for borrowing under the unsecured revolving credit facility will enable us to successfully manage our Company.
Current wording
Cash Balance. As of June 30, 2024, our unrestricted cash balance was $159.2 million. We believe that our current unrestricted cash balance and our ability to draw the $500.0 million capacity available for borrowing under the unsecured revolving credit facility will enable us to successfully manage our Company.
Previous wording
Debt. As of March 31, 2024, we had $818.5 million of debt, $471.0 million of cash and cash equivalents, including restricted cash, and total assets of $3.1 billion. We believe that by maintaining appropriate debt levels, staggering maturity dates and maintaining a highly flexible structure, we will have lower capital costs than more highly leveraged companies, or companies with
Current wording
Debt. As of June 30, 2024, we had $818.0 million of debt, $234.0 million of cash and cash equivalents, including restricted cash, and total assets of $3.1 billion. We believe that by maintaining appropriate debt levels, staggering maturity dates and maintaining a highly flexible structure, we will have lower capital costs than more highly leveraged companies, or companies with limited flexibility due to restrictive covenants. In December 2024, the $73.0 million loan secured by the JW Marriott New Orleans will mature. We expect to refinance or repay the outstanding balance prior to or at the maturity date.
Previous wording
We may in the future seek to obtain mortgages on one or more of our 13 unencumbered hotels (subject to certain stipulations under our unsecured term loans and senior notes), all of which were held by subsidiaries whose interests were pledged to our credit facility as of March 31, 2024. Following the purchase of the Hyatt Regency San Antonio Riverwalk in April 2024, we will have 14 unencumbered hotels. Should we obtain secured financing on any of our unencumbered hotels, the amount of capital available through our credit facility or future unsecured borrowings may be reduced.
Current wording
We may in the future seek to obtain mortgages on one or more of our 14 unencumbered hotels (subject to certain provisions under our unsecured term loans and senior notes), all of which were held by subsidiaries whose interests were pledged to our credit facility as of June 30, 2024. Should we obtain secured financing on any of our unencumbered hotels, the amount of capital available through our credit facility or future unsecured borrowings may be reduced.
Previous wording
We believe we maintain each of our hotels in good repair and condition and in general conformity with applicable franchise and management agreements, ground lease, laws and regulations. Our capital expenditures primarily relate to the ongoing maintenance of our hotels and are budgeted in the reserve accounts described in the following paragraph. We also incur capital expenditures for cyclical renovations, hotel repositionings and development. We invested $27.7 million and $22.5 million in our portfolio and other assets during the first quarters of 2024 and 2023, respectively. As of March 31, 2024, we have contractual construction commitments totaling $85.4 million for ongoing renovations. During the remainder of 2024, we will continue to incur significant capital expenditures as we complete the substantial renovation and rebranding of The Confidante Miami Beach to Andaz Miami Beach. If we renovate additional hotels in the future, our capital expenditures will likely increase.
Current wording
We believe we maintain each of our hotels in good repair and condition and in general conformity with applicable franchise and management agreements, ground lease, laws and regulations. Our capital expenditures primarily relate to the ongoing maintenance of our hotels and are budgeted in the reserve accounts described in the following paragraph. We also incur capital expenditures for cyclical renovations, hotel repositionings and development. We invested $68.7 million and $49.2 million in our portfolio and other assets during the first six months of 2024 and 2023, respectively. As of June 30, 2024, we have contractual construction commitments totaling $97.8 million for ongoing renovations. During the remainder of 2024, we will continue to incur significant capital expenditures as we complete the substantial renovation and rebranding of The Confidante Miami Beach to Andaz Miami Beach. If we renovate additional hotels in the future, our capital expenditures will likely increase.
Previous wording
With respect to our hotels that are operated under management or franchise agreements with major national hotel brands and our hotel subject to a first mortgage lien, we are obligated to maintain an FF&E reserve account for future planned and emergency-related capital expenditures at these hotels. The amount funded into each of these reserve accounts is determined pursuant to the management, franchise and loan agreements for each of the respective hotels, ranging between 1.0% and 5.0% of the respective hotel’s applicable annual revenue. As of March 31, 2024, our balance sheet includes restricted cash of $68.6 million, which was held in FF&E reserve accounts for future capital expenditures at the majority of our hotels. According to certain loan and management agreements, reserve funds are to be held by the lender or managers in restricted cash accounts, and we are not required to spend the entire amount in such reserve accounts each year.
Current wording
With respect to our hotels that are operated under management or franchise agreements with major national hotel brands and our hotel subject to a first mortgage lien, we are obligated to maintain an FF&E reserve account for future planned and emergency-related capital expenditures at these hotels. The amount funded into each of these reserve accounts is determined pursuant to the management, franchise and loan agreements for each of the respective hotels, ranging between 2.0% and 5.0% of the respective hotel’s applicable annual revenue. As of June 30, 2024, our balance sheet includes restricted cash of $73.2 million, which was held in FF&E reserve accounts for future capital expenditures at the majority of our hotels. According to certain loan and management agreements, reserve funds are to be held by the lender or managers in restricted cash accounts, and we are not required to spend the entire amount in such reserve accounts each year.
Previous wording
Recoverability of assets that will continue to be used is measured by comparing the carrying amount of the asset to the related total future undiscounted net cash flows. If an asset’s carrying value is not recoverable through those cash flows, the asset is considered to be impaired. The impairment is measured by the difference between the asset’s carrying amount and its fair value. We perform a fair value assessment using valuation techniques such as discounted cash flows and comparable sales transactions in the market to estimate the fair value of the hotel and, if appropriate and available, current estimated net sales proceeds from pending offers. Our judgment is required in determining the discount rate, terminal capitalization rate, the estimated growth of revenues and expenses, revenue per available room and margins, as well as specific market and economic conditions.
Current wording
the asset is considered to be impaired. The impairment is measured by the difference between the asset’s carrying amount and its fair value. We perform a fair value assessment using valuation techniques such as discounted cash flows and comparable sales transactions in the market to estimate the fair value of the hotel and, if appropriate and available, current estimated net sales proceeds from pending offers. Our judgment is required in determining the discount rate, terminal capitalization rate, the estimated growth of revenues and expenses, revenue per available room and margins, as well as specific market and economic conditions.
Rearranged current paragraphs (6)
Current report — wording carried from elsewhere
The following table presents our unaudited operating results for the six months ended June 30, 2024 and 2023, including the amount and percentage change in the results between the two periods.
Current report — wording carried from elsewhere
Corporate overhead expense*.*Corporate overhead expense decreased $0.2 million, or 2.7%, in the second quarter of 2024 as compared to the second quarter of 2023, primarily due to decreased payroll and related expenses, due diligence expenses, and deferred stock amortization expense. These decreased expenses were partially offset by increased professional fees.
Current report — wording carried from elsewhere
Non-GAAP Financial Measures. We use the following “non-GAAP financial measures” that we believe are useful to investors as key supplemental measures of our operating performance: EBITDAre; Adjusted EBITDAre; FFO attributable to common stockholders; and Adjusted FFO attributable to common stockholders. These measures should not be considered in isolation or as a substitute for measures of performance in accordance with accounting principles generally accepted in the United States (“GAAP”). In addition, our calculation of these measures may not be comparable to other companies that do not define such terms exactly the same
Current report — wording carried from elsewhere
Operating activities*.* Our net cash provided by or used in operating activities fluctuates primarily as a result of changes in the net cash generated by our hotels, offset by the cash paid for corporate expenses. Our net cash provided by or used in operating
Current report — wording carried from elsewhere
completed. As a result of potential increases in inflation rates and interest rates, as well as possible recessionary periods in the future, certain sources of capital may not be as readily available to us as they have in the past or may only be available at higher costs.
Current report — wording carried from elsewhere
Recoverability of assets that will continue to be used is measured by comparing the carrying amount of the asset to the related total future undiscounted net cash flows. If an asset’s carrying value is not recoverable through those cash flows,
Rearranged previous paragraphs (3)
Previous report — wording carried elsewhere
The Series G preferred stock initially accrued dividends at a rate equal to the Montage Healdsburg’s annual net operating income yield on our total investment in the resort. In January 2024, the annual dividend rate increased to the greater of 3.0% or the
Previous report — wording carried elsewhere
During the first quarter of 2024, we paid $3.2 million to repurchase common stock to satisfy the tax obligations in connection with the vesting of restricted common stock issued to employees, $0.5 million in scheduled principal payments on our loan secured by the JW Marriott New Orleans and $29.8 million in dividends and distributions to our preferred and common stockholders.
Previous report — wording carried elsewhere
limited flexibility due to restrictive covenants. In December 2024, the $73.5 million loan secured by the JW Marriott New Orleans will mature. We expect to refinance or repay the outstanding balance prior to or at the maturity date.