Xenia Hotels Resorts Inc

Previous wording

Certain statements in this Quarterly Report on Form 10-Q, other than purely historical information, are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These statements include statements about Xenia’s plans, objectives, strategies, financial performance and outlook, trends, the amount and timing of future cash distributions, prospects or future events and involve known and unknown risks that are difficult to predict. As a result, our actual financial results, performance, achievements or prospects may differ materially from those expressed or implied by these forward-looking statements. In some cases, you can identify forward-looking statements by the use of words such as “may,” “could,” “expect,” “intend,” “plan,” “seek,” “anticipate,” “believe,” “estimate,” “guidance,” “predict,” “potential,” “continue,” “likely,” “will,” “would,” “illustrative” and variations of these terms and similar expressions, or the negative of these terms or similar expressions. Such forward-looking statements are necessarily based upon estimates and assumptions that, while considered reasonable by Xenia and its management based on their knowledge and understanding of the business and industry, are inherently uncertain. These statements are not guarantees of future performance, and stockholders should not place undue reliance on forward-looking statements. Forward-looking statements in this Form 10-Q include, among others, statements about our plans, strategies and the impact of macroeconomic factors, including inflation, rising interest rates, a potential domestic and/or global recession, global conflicts, general economic and political uncertainty in key global markets, including as a result of the 2024 U.S. presidential election, the evolving workforce and wage landscape, capital expenditures, the ability to consummate acquisitions and dispositions of hotel properties, liquidity and derivations thereof, financial performance and potential dividends, prospects or future events. There are a number of risks, uncertainties and other important factors, many of which are beyond our control, that could cause our actual results to differ materially from the forward-looking statements contained in this Quarterly Report on Form 10-Q. Such risks, uncertainties and other important factors include, among others: the risk factors set forth under “Part I-Item 1A. Risk Factors” and “Part II-Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission (the “SEC”) on February 27, 2024, as may be updated elsewhere in this report and the information set forth in other Quarterly Reports on Form 10-Q and Current Reports on Form 8-K that we have filed or will file with t…

Excerpt shortened here; the source contains the full paragraph.

Current wording

Certain statements in this Quarterly Report on Form 10-Q, other than purely historical information, are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These statements include statements about Xenia’s plans, objectives, strategies, financial performance and outlook, trends, the amount and timing of future cash distributions, prospects or future events and involve known and unknown risks that are difficult to predict. As a result, our actual financial results, performance, achievements or prospects may differ materially from those expressed or implied by these forward-looking statements. In some cases, you can identify forward-looking statements by the use of words such as “may,” “could,” “expect,” “intend,” “plan,” “seek,” “anticipate,” “believe,” “estimate,” “guidance,” “predict,” “potential,” “continue,” “likely,” “will,” “would,” “illustrative” and variations of these terms and similar expressions, or the negative of these terms or similar expressions. Such forward-looking statements are necessarily based upon estimates and assumptions that, while considered reasonable by Xenia and its management based on their knowledge and understanding of the business and industry, are inherently uncertain. These statements are not guarantees of future performance, and stockholders should not place undue reliance on forward-looking statements. Forward-looking statements in this Form 10-Q include, among others, statements about our plans, strategies and the impact of macroeconomic factors, including inflation, rising interest rates, a potential domestic and/or global recession, global conflicts, the evolving workforce and wage landscape, capital expenditures, the ability to consummate acquisitions and dispositions of hotel properties, liquidity and derivations thereof, financial performance and potential dividends, prospects or future events. There are a number of risks, uncertainties and other important factors, many of which are beyond our control, that could cause our actual results to differ materially from the forward-looking statements contained in this Quarterly Report on Form 10-Q. Such risks, uncertainties and other important factors include, among others: the risk factors set forth under “Part I-Item 1A. Risk Factors” and “Part II-Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission (the “SEC”) on February 27, 2024, as may be updated elsewhere in this report and the information set forth in other Quarterly Reports on Form 10-Q and Current Reports on Form 8-K that we have filed or will file with the SEC; general economic uncertainty and a contraction in the U.S. or global economy or low levels of economic growth; macroecon…

Excerpt shortened here; the source contains the full paragraph.

Previous wording

Xenia Hotels & Resorts, Inc. ("we", "us", "our", "Xenia" or the "Company") is a self-advised and self-administered REIT that invests primarily in uniquely positioned luxury and upper upscale hotels and resorts with a focus on the top 25 lodging markets as well as key leisure destinations in the United States ("U.S."). As of June 30, 2024, we owned 32 hotels and resorts, comprising 9,515 rooms across 14 states. Our hotels are primarily operated and/or licensed by industry leaders such as Marriott, Hyatt, Fairmont, Kimpton, Loews, Hilton, The Kessler Collection and Davidson.

Current wording

Xenia Hotels & Resorts, Inc. ("we", "us", "our", "Xenia" or the "Company") is a self-advised and self-administered REIT that invests in uniquely positioned luxury and upper upscale hotels and resorts with a focus on the top 25 lodging markets as well as key leisure destinations in the United States ("U.S."). As of September 30, 2024, we owned 31 hotels and resorts, comprising 9,408 rooms across 14 states. Our hotels are primarily operated and/or licensed by industry leaders such as Marriott, Hyatt, Fairmont, Kimpton, Loews, Hilton and The Kessler Collection.

Previous wording

The accompanying condensed consolidated financial statements include the accounts of the Company, the Operating Partnership, and XHR Holding. The Company's subsidiaries generally consist of limited liability companies, limited partnerships and the TRS. The effects of all inter-company transactions have been eliminated. Corporate costs directly associated with our executive offices, personnel and other administrative costs are reflected as general and administrative expenses on the condensed consolidated statements of operations and comprehensive income.

Current wording

The accompanying condensed consolidated financial statements include the accounts of the Company, the Operating Partnership, and XHR Holding. The Company's subsidiaries generally consist of limited liability companies, limited partnerships and the TRS. The effects of all inter-company transactions have been eliminated. Corporate costs directly associated with our executive offices, personnel and other administrative costs are reflected as general and administrative expenses on the condensed consolidated statements of operations and comprehensive income (loss).

Previous wording

The U.S. lodging industry historically exhibits a strong correlation to U.S. GDP, which increased at an estimated annual rate of approximately 1.4% and 2.8% during the first and second quarters of 2024, according to the U.S. Department of Commerce, representing a decrease in the annual rate growth trend from the third and fourth quarters of 2023 of 4.9% and 3.4%, respectively. The increase during the second quarter reflected increases in consumer spending, private inventory investment, and nonresidential fixed investment that were partially offset by an increase in imports. In addition, the unemployment rate rose slightly to 4.1% in June 2024 compared to 3.8% in March 2024 and 3.7% in December 2023. We continue to monitor and evaluate the challenges associated with inflationary pressures, rising interest rates, a potential domestic and/or global recession, global conflicts, and the evolving workforce and wage landscape. The impact of these potential challenges could negatively impact the Company’s operating results as well as its ability to consummate acquisitions and dispositions of hotel properties in the near term.

Current wording

The U.S. lodging industry historically exhibits a strong correlation to U.S. GDP, which increased at an estimated annual rate of approximately 2.8% during the third quarter of 2024, according to the U.S. Department of Commerce, compared to the increase in annual rate growth trend from the first and second quarters of 2024 of 1.4% and 3.0%, respectively. The increase during the third quarter reflected increases in consumer spending, exports and federal government spending that were partially offset by an increase in imports. In addition, the unemployment rate remained flat at 4.1% in September 2024 compared to June 2024 and rose slightly compared to 3.8% in March 2024. We continue to monitor and evaluate the challenges associated with inflationary pressures, rising interest rates, a potential domestic and/or global recession, global conflicts, and the evolving workforce and wage landscape. The impact of these potential challenges could negatively impact the Company’s operating results as well as its ability to consummate acquisitions and dispositions of hotel properties in the near term.

Previous wording

Demand increased 1.4% and 0.1% during the three and six months ended June 30, 2024. New hotel supply increased 0.5% during the same periods. An increase in ADR of 1.6% coupled with an increase in occupancy of 0.9% led to an increase in industry RevPAR of 2.5% for the three months ended June 30, 2024 compared to 2023. An increase in ADR of 1.8% was partially offset by a decrease in occupancy of 0.4% which led to an increase in industry RevPAR of 1.4% for the six months ended June 30, 2024 compared to 2023.

Current wording

Demand remained flat during the three and nine months ended September 30, 2024. New hotel supply increased 0.5% during the same periods. An increase in ADR of 1.4% was partially offset by a decrease in occupancy of 0.5% which led to an increase in industry RevPAR of 0.9% for the three months ended September 30, 2024 compared to 2023. An increase in ADR of 1.6% was partially offset by a decrease in occupancy of 0.5% which led to an increase in industry RevPAR of 1.2% for the nine months ended September 30, 2024 compared to 2023.

Previous wording

Our total portfolio RevPAR, which includes the results of hotels sold or acquired for the period of ownership by the Company, increased 1.8% and 0.1% to $185.69 and $181.28 for the three and six months ended June 30, 2024 compared to $182.49 and $181.03 for the three and six months ended June 30, 2023. The increase in our total portfolio RevPAR for the three and six months ended June 30, 2024 compared to the same periods in 2023 was driven primarily by an increase in occupancy, partially offset by disruption from renovations and normalizing leisure demand. Further, demand has continued to shift to a more traditional mix of leisure, business transient and group within our portfolio. Excluding Hyatt Regency Scottsdale Resort & Spa at Gainey Ranch ("Hyatt Regency Scottsdale"), which is undergoing a transformative renovation, total portfolio RevPAR increased 5.0% and 4.4% to $191.28 and $184.67 for the three and six months ended June 30, 2024 compared to $182.11 and $176.93 for the three and six months ended June 30, 2023, respectively.

Current wording

Our total portfolio RevPAR, which includes the results of hotels sold or acquired for the period of ownership by the Company, increased 1.6% and 0.6% to $160.96 and $174.50 for the three and nine months ended September 30, 2024 compared to $158.48 and $173.43 for the three and nine months ended September 30, 2023. The increase in our total portfolio RevPAR for the three and nine months ended September 30, 2024 compared to the same periods in 2023 was driven primarily by an increase in occupancy, partially offset by disruption from renovations and normalizing leisure demand. Further, demand has continued to shift to a more traditional mix of leisure, business transient and group within our portfolio. Excluding Grand Hyatt Scottsdale Resort, which is in the final stages of a transformative renovation, total portfolio RevPAR increased 1.2% and 3.4% to $168.21 and $179.18 for the three and nine months ended September 30, 2024 compared to $166.14 and $173.29 for the three and nine months ended September 30, 2023, respectively.

Previous wording

Net income increased 11.8% for the three months ended June 30, 2024 compared to the three months ended June 30, 2023, which was primarily attributed to an income tax benefit of $4.1 million compared to income tax expense of $1.8 million, a $1.7 million reduction in depreciation and amortization expense, a $1.4 million reduction in interest expense and a $0.1 million reduction in operating loss attributed to hotels sold in 2022. These increases were partially offset by a $5.9 million decrease in hotel operating income, a $1.0 million reduction in other income, a $0.4 million increase in general and administrative costs and a $0.1 million increase in impairment and other losses.

Current wording

Net loss decreased 16.3% for the three months ended September 30, 2024 compared to the three months ended September 30, 2023, which was primarily attributed a $1.8 million reduction in general and administrative expenses, a $1.6 million increase in gain on sale of investment properties, a $1.3 million reduction in depreciation and amortization expense, a $0.9 million increase in other income, a $0.4 million reduction in interest expense and a $0.3 million reduction in other operating expenses. These increases were partially offset by a $3.3 million reduction in hotel operating income, a $1.0 million reduction in income tax benefit, a $0.2 million decrease in gain on business interruption, a $0.2 million reduction in operating loss attributed to one hotel sold in 2024 and a $0.1 million increase in impairment and other losses.

Previous wording

Net income increased 19.6% for the six months ended June 30, 2024 compared to the six months ended June 30, 2023, which was primarily attributed to an income tax benefit of $3.4 million compared to income tax expense of $7.0 million, a $3.4 million reduction in depreciation and amortization expense, a $3.2 million reduction in interest expense, a $1.2 million reduction in loss on extinguishment of debt, a $0.7 million increase in gain on business interruption, a $0.3 million reduction in operating loss attributed to hotels sold in 2022 and a $0.2 million increase in other income. These increases were partially offset by a $12.5 million reduction in hotel operating income, a $1.8 million increase in general and administrative costs, a $0.6 million increase in other operating expenses and a $0.4 million increase in impairment and other losses.

Current wording

Net income increased 46.1% for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023, which was primarily attributed to an income tax benefit of $4.0 million compared to income tax expense of $5.4 million, a $4.7 million reduction in depreciation and amortization expense, a $3.6 million reduction in interest expense, a $1.6 million increase in gain on sale of investment properties, a $1.2 million reduction in loss on extinguishment of debt, a $1.1 million increase in other income and a $0.5 million increase in gain on business interruption. These increases were partially offset by a $15.7 million reduction in hotel operating income, a $0.5 million increase in impairment and other losses and a $0.3 million increase in other operating expenses.

Previous wording

Adjusted EBITDAre attributable to common stock and unit holders for the three and six months ended June 30, 2024 decreased 8.4% compared to the three and six months ended June 30, 2023 and Adjusted FFO attributable to common stock and unit holders increased 2.8% and 1.8% for the same periods. Refer to "Non-GAAP Financial Measures" for the definition of these financial measures, a description of the reasons we believe they are useful to investors as key supplemental measures of our operating performance and the reconciliation of these non-GAAP financial measures to net income attributable to common stock and unit holders.

Current wording

Adjusted EBITDAre attributable to common stock and unit holders for the three and nine months ended September 30, 2024 decreased 4.4% and 7.5% compared to the three and nine months ended September 30, 2023 and Adjusted FFO attributable to common stock and unit holders decreased 9.0% and 0.7% for the same periods. Refer to "Non-GAAP Financial Measures" for the definition of these financial measures, a description of the reasons we believe they are useful to investors as key supplemental measures of our operating performance and the reconciliation of these non-GAAP financial measures to net income (loss) attributable to common stock and unit holders.

Previous wording

The following table sets forth certain operating information for the three and six months ended June 30, 2024 and 2023:

Current wording

The following table sets forth certain operating information for the three and nine months ended September 30, 2024 and 2023:

Previous wording

Rooms revenues for our total portfolio increased $2.8 million, or 1.8%, to $160.8 million for the three months ended June 30, 2024 from $157.9 million for the three months ended June 30, 2023 driven primarily by an increase in occupancy which was partially offset by disruption from renovations and normalizing leisure demand. Excluding Hyatt Regency Scottsdale, which is undergoing a transformative renovation, rooms revenues for the three months ended June 30, 2024 increased $7.6 million, or 5.1%, when compared to the prior period.

Current wording

Rooms revenues for our total portfolio increased $0.9 million, or 0.7%, to $139.6 million for the three months ended September 30, 2024 from $138.7 million for the three months ended September 30, 2023 driven primarily by an increase in occupancy which was partially offset by disruption from renovations, normalizing leisure demand, the impact from hurricanes and a decline in average daily rate. The increase is net of a reduction of $1.2 million attributed to the sale of Lorien Hotel & Spa in July 2024. Excluding Grand Hyatt Scottsdale Resort, which is in the final stages of a transformative renovation, rooms revenues for the three months ended September 30, 2024 increased $1.6 million, or 1.2%, when compared to the prior period.

Previous wording

Rooms revenues for our total portfolio increased $2.3 million, or 0.7%, to $313.9 million for the six months ended June 30, 2024 from $311.6 million for the six months ended June 30, 2023 driven primarily by an increase in occupancy which was partially offset by disruption from renovations and normalizing leisure demand. Excluding Hyatt Regency Scottsdale, which is undergoing a transformative renovation, rooms revenues for the six months ended June 30, 2024 increased $14.5 million, or 5.0%, when compared to the prior period.

Current wording

Rooms revenues for our total portfolio increased $3.2 million, or 0.7%, to $453.5 million for the nine months ended September 30, 2024 from $450.3 million for the nine months ended September 30, 2023 driven primarily by an increase in occupancy which was partially offset by disruption from renovations, normalizing leisure demand, the impact from hurricanes and a decline in average daily rate. The increase is net of a reduction of $1.0 million attributed to the sale of Lorien Hotel & Spa in July 2024. Excluding Grand Hyatt Scottsdale Resort, rooms revenues for the nine months ended September 30, 2024 increased $15.9 million, or 3.8%, when compared to the prior period.

Previous wording

Other revenues increased $1.9 million, or 9.2%, to $23.0 million for the three months ended June 30, 2024 from $21.1 million for the three months ended June 30, 2023 primarily as a result of increased occupancy which was partially offset by disruption from renovations. Excluding Hyatt Regency Scottsdale, other revenues for the three months ended June 30, 2024 increased $2.3 million, or 12.0%, when compared to the prior period.

Current wording

Other revenues increased $0.9 million, or 4.2%, to $22.4 million for the three months ended September 30, 2024 from $21.5 million for the three months ended September 30, 2023 primarily as a result of increased occupancy which was partially offset by disruption from renovations. This increase is net of a reduction of $0.3 million attributed to the sale of Lorien Hotel & Spa in July 2024. Excluding Grand Hyatt Scottsdale Resort, other revenues for the three months ended September 30, 2024 increased $1.5 million, or 7.2%, when compared to the prior period.

Previous wording

Other revenues increased $4.3 million, or 10.8%, to $44.6 million for the six months ended June 30, 2024 from $40.3 million for the six months ended June 30, 2023 primarily as a result of increased occupancy which was partially offset by disruption from renovations. Excluding Hyatt Regency Scottsdale, other revenues for the six months ended June 30, 2024 increased $5.4 million, or 14.7%, when compared to the prior period.

Current wording

Other revenues increased $5.2 million, or 8.5%, to $67.1 million for the nine months ended September 30, 2024 from $61.8 million for the nine months ended September 30, 2023 primarily as a result of increased occupancy which was partially offset by disruption from renovations. This increase is net of a reduction of $0.3 million attributed to the sale of Lorien Hotel & Spa in July 2024. Excluding Grand Hyatt Scottsdale Resort, other revenues for the nine months ended September 30, 2024 increased $6.8 million, or 12.2%, when compared to the prior period.

Previous wording

Total hotel operating expenses increased $7.2 million, or 4.0%, to $185.8 million for the three months ended June 30, 2024 from $178.6 million for the three months ended June 30, 2023 largely due to increasing labor costs partially offset by renovation disruption. Excluding Hyatt Regency Scottsdale, total hotel operating expenses for the three months ended June 30, 2024 increased $10.2 million, or 6.1%, when compared to the prior period.

Current wording

Total hotel operating expenses increased $8.0 million, or 4.8%, to $175.7 million for the three months ended September 30, 2024 from $167.7 million for the three months ended September 30, 2023 largely due to increasing labor costs partially offset by disruption from renovations. This increase is net of a reduction of $1.6 million attributed to the sale of Lorien Hotel & Spa in July 2024 and the impact from hurricanes. Excluding Grand Hyatt Scottsdale Resort, total hotel operating expenses for the three months ended September 30, 2024 increased $8.1 million, or 5.0%, when compared to the prior period.

Previous wording

Total hotel operating expenses increased $10.9 million, or 3.1%, to $368.8 million for the six months ended June 30, 2024 from $357.9 million for the six months ended June 30, 2023 largely due to increasing labor costs partially offset by renovation disruption. Excluding Hyatt Regency Scottsdale, total hotel operating expenses for the six months ended June 30, 2024 increased $18.9 million, or 5.7%, when compared to the prior period.

Current wording

Total hotel operating expenses increased $19.0 million, or 3.6%, to $544.5 million for the nine months ended September 30, 2024 from $525.6 million for the nine months ended September 30, 2023 largely due to increasing labor costs partially offset by disruption from renovations. This increase is net of a reduction of $1.5 million attributed to the sale of Lorien Hotel & Spa in July 2024 and the impact from hurricanes. Excluding Grand Hyatt Scottsdale Resort, total hotel operating expenses for the nine months ended September 30, 2024 increased $26.8 million, or 5.5%, when compared to the prior period.

Previous wording

Depreciation and amortization expense decreased $1.7 million, or 5.0%, and $3.4 million, or 5.1%, to $31.8 million and $63.8 million for the three and six months ended June 30, 2024 from $33.5 million and $67.2 million for the three and six months ended June 30, 2023. The decrease was primarily attributed to fully depreciated assets during the comparable periods partially offset by the timing of new assets being placed in service.

Current wording

Depreciation and amortization expense decreased $1.3 million, or 3.8%, and $4.7 million, or 4.7%, to $31.8 million and $95.6 million for the three and nine months ended September 30, 2024 from $33.1 million and $100.3 million for the three and nine months ended September 30, 2023, respectively. The decrease was primarily attributed to fully depreciated assets during the comparable periods partially offset by the timing of new assets being placed in service and the sale of Lorien Hotel & Spa in July 2024.

Previous wording

Real estate taxes, personal property taxes and insurance expense increased $0.5 million, or 4.2%, to $13.3 million for the three months ended June 30, 2024 from $12.8 million for the three months ended June 30, 2023. This increase was primarily attributed to a $0.3 million increase in real estate taxes and a $0.3 million increase in insurance premiums compared to the prior period.

Current wording

Real estate taxes, personal property taxes and insurance expense increased $0.2 million, or 1.5%, to $13.1 million for the three months ended September 30, 2024 from $12.9 million for the three months ended September 30, 2023. This increase compared to the prior period was primarily attributed to a $0.5 million increase in insurance premiums and was partially offset by a net $0.2 million reduction in real estate taxes primarily attributed to tax refunds.

Previous wording

Real estate taxes, personal property taxes and insurance expense increased $1.6 million, or 6.2%, to $26.8 million for the six months ended June 30, 2024 from $25.3 million for the six months ended June 30, 2023. This increase was primarily attributed to a $0.8 million increase in real estate taxes and a $0.7 million increase in insurance premiums compared to the prior period.

Current wording

Real estate taxes, personal property taxes and insurance expense increased $1.7 million, or 4.6%, to $39.9 million for the nine months ended September 30, 2024 from $38.2 million for the nine months ended September 30, 2023. This increase was primarily attributed to a $1.2 million increase in insurance premiums and a net $0.6 million increase in real estate taxes compared to the prior period. These increases were partially offset by a $0.1 million reduction attributed to the sale of Lorien Hotel & Spa in July 2024.

Previous wording

Ground lease expensei ncreased $0.1 million, or 6.8%, and $0.1 million, or 8.6%, to $0.8 million and $1.6 million for thethree and six months ended June 30, 2024 from $0.8 million and $1.5 million for thethree and six months ended June 30, 2023. The increase was primarily attributable to an increase in percentage rent in 2024, which is based on revenues at certain hotels with ground leases, compared to the prior period.

Current wording

Ground lease expensei ncreased $0.2 million, or 7.4%, to $2.4 million for thenine months ended September 30, 2024 from $2.2 million for thenine months ended September 30, 2023. The increase was primarily attributable to an increase in percentage rent in 2024, which is based on revenues at certain hotels with ground leases, compared to the prior period.

Previous wording

General and administrative expenses increased $0.4 million, or 3.7%, and $1.8 million, or 9.8%, to $10.3 million and $20.6 million for the three and six months ended June 30, 2024 from $10.0 million and $18.8 million for the three and six months ended June 30, 2023. The increase is primarily due an increase in stock compensation expense resulting from the acceleration of expense recognition for awards granted to participants that have met or will meet retirement eligibility requirements prior to the applicable vesting dates.

Current wording

General and administrative expenses decreased $1.8 million, or 18.8%, to $7.8 million for the three months ended September 30, 2024 from $9.6 million the three months ended September 30, 2023. The decrease is primarily related to a decrease in stock compensation expense resulting from the timing of accelerated expense recognition for awards granted to participants that have met or will meet retirement eligibility requirements prior to the applicable vesting dates.

Previous wording

Gain on business interruption insurance was $0.7 million for the six months ended June 30, 2024, which was attributed to insurance proceeds, net of license and management fees, for a portion of lost income related to a restaurant kitchen fire which occurred in 2023.

Current wording

Gain on business interruption insurance was $0.7 million for the nine months ended September 30, 2024, which was attributed to insurance proceeds, net of license and management fees, for a portion of lost income related to a restaurant kitchen fire which occurred in 2023.

Previous wording

Other operating expenses remained flat at $0.4 million for the three months ended June 30, 2024 compared to the three months ended June 30, 2023 primarily due to a net reduction in franchise tax expense which was partially offset by the recognition of pre-opening costs.

Current wording

Other operating expenses decreased $0.3 million, or 150.0%, to a credit of $0.1 million for the three months ended September 30, 2024 from expense of $0.2 million compared to the three months ended September 30, 2023 primarily due to a net reduction in franchise tax expense which was partially offset by the recognition of pre-opening expenses.

Previous wording

For the three and six months ended June 30, 2024, the Company expensed $0.1 million and $0.4 million, respectively, of repair and cleanup costs related to casualty losses sustained at certain properties.

Current wording

For the three and nine months ended September 30, 2024, the Company expensed $0.1 million and $0.5 million, respectively, of repair and clean up costs related to property damage sustained at certain properties.

Previous wording

Other income decreased $1.0 million, or 32.9%, to $1.9 million for the three months ended June 30, 2024 from $2.9 million for the three months ended June 30, 2023. This decrease was primarily attributed to a decrease in interest income of $0.9 million primarily due to lower cash balances during the respective periods as well as the recognition of a gain on insurance recovery of $0.5 million during the second quarter of 2023 associated with a casualty loss at one property. These decreases were partially offset by the recognition of a $0.4 million gain on insurance recovery related casualty losses sustained at certain properties.

Current wording

Other income increased $0.9 million, or 44.0%, to $2.9 million for the three months ended September 30, 2024 from $2.0 million for the three months ended September 30, 2023. This increase was primarily attributed to the recognition of a $0.9 million gain on insurance recovery related to casualty losses sustained at one property during the three months ended September 30, 2024.

Previous wording

Other income increased $0.2 million, or 4.6%, to $4.4 million for the six months ended June 30, 2024 from $4.2 million for the six months ended June 30, 2023. The increase is primarily attributed to the recognition of a $1.4 million gain on insurance recovery related to casualty losses at certain properties. Additionally, during the six months ended June 30, 2023, $1.6 million of loan costs were expensed in connection with the refinancing of the prior corporate credit facility. These increases were partially offset by a decrease in interest income of $1.5 million primarily due to lower cash balances during the respective periods as well as the recognition of a gain on insurance recovery of $0.5 million during the six months ended June 30, 2023 associated with a casualty loss at one property.

Current wording

Other income increased $1.1 million, or 17.5%, to $7.3 million for the nine months ended September 30, 2024 from $6.2 million for the nine months ended September 30, 2023. The increase is primarily attributed to the recognition of a $2.3 million gain on insurance recovery related to casualty losses at certain properties. Additionally, during the nine months ended September 30, 2023, $1.6 million of loan costs were expensed in connection with the refinancing of the prior corporate credit facility. These increases were partially offset by a decrease in interest income of $1.9 million primarily due to lower cash balances during the respective periods as well as the recognition of a gain on insurance recovery of $0.5 million during the nine months ended September 30, 2023 associated with a casualty loss at one property.

Previous wording

Interest expense decreased $1.4 million, or 6.5%, and $3.2 million, or 7.3%, to $20.2 million and $40.6 million for the three and six months ended June 30, 2024 from $21.7 million and $43.8 million for the three and six months ended June 30, 2023. The decreases were primarily due to the impact of interest rate swaps entered into during the second quarter of 2023, reduced interest expense related to the repurchase and retirement of $35.3 million aggregate principal of 6.375% 2020 Senior Notes due 2025 during 2023 and capitalized interest of $0.9 million and $1.5 million during the three and six months ended June 30, 2024. These decreases were partially offset by an increase attributed to rising interest rates on variable debt and higher average outstanding term loan debt.

Current wording

Interest expense decreased $0.4 million, or 1.9%, and $3.6 million, or 5.5%, to $20.1 million and $60.7 million for the three and nine months ended September 30, 2024 from $20.5 million and $64.3 million for the three and nine months ended September 30, 2023. The decreases were primarily due to capitalized interest of $1.0 million and $2.5 million during the three and nine months ended September 30, 2024, respectively. Additionally, for the nine months ended September 30, 2024, interest expense decreased compared to the nine months ended September 30, 2023 due to the impact of interest rate swaps entered into during the second quarter of 2023 and reduced interest expense related to the repurchase and retirement of $35.3 million aggregate principal of 6.375% 2020 Senior Notes due 2025 during 2023. These decreases were partially offset by an increase attributed to rising interest rates on variable debt and higher average outstanding term loan debt.

Previous wording

The loss on extinguishment of debt of $1.2 million for the six months ended June 30, 2023 was primarily attributable to the write-off of certain unamortized debt issuance costs associated with the prior revolving credit facility, which was refinanced with the revolving line of credit in January 2023, as well as the early repayments of the corporate credit facility term loan that was due to mature in September 2024 and one mortgage loan.

Current wording

The loss on extinguishment of debt of $1.2 million for the nine months ended September 30, 2023 was primarily attributable to the write-off of certain unamortized debt issuance costs associated with the prior revolving credit facility, which was refinanced with the revolving line of credit in January 2023, as well as the early repayments of the corporate credit facility term loan that was due to mature in September 2024 and one mortgage loan.

Previous wording

Income tax benefit increased $5.9 million, or 330.0%, and $10.4 million, or 148.7%, to $4.1 million and $3.4 million for the three and six months ended June 30, 2024 from income tax expense of $1.8 million and $7.0 million for the three and six months ended June 30, 2023. The increase from prior year is primarily attributable to a $5.0 million tax benefit associated with the release of the valuation allowance related to certain state net operating loss carryforwards, lower projected taxable income when compared to the prior periods and the use of federal and state net operating loss carryforwards.

Current wording

Income tax benefit (expense) changed $9.4 million, or 174.8%, to an income tax benefit of $4.0 million for the nine months ended September 30, 2024 from income tax expense of $5.4 million for the nine months ended September 30, 2023. The increase from prior year is primarily attributable to a $5.2 million tax benefit associated with the release of the valuation allowance related to certain state net operating loss carryforwards, lower projected taxable income when compared to the prior periods and the use of federal and state net operating loss carryforwards.

Previous wording

As of June 30, 2024, we had $143.6 million of consolidated cash and cash equivalents and $61.5 million of restricted cash and escrows. The restricted cash as of June 30, 2024 primarily consisted of $55.9 million related to FF&E reserves as required per the terms of our management and franchise agreements, $3.7 million in deposits made for capital projects and cash held in mortgage escrows of $1.8 million for real estate taxes and replacement reserves.

Current wording

As of September 30, 2024, we had $161.5 million of consolidated cash and cash equivalents and $63.2 million of restricted cash and escrows. The restricted cash as of September 30, 2024 primarily consisted of $57.3 million related to FF&E reserves as required per the terms of our management and franchise agreements, $3.5 million in deposits made for capital projects and cash held in mortgage escrows of $2.4 million for real estate taxes and replacement reserves.

Previous wording

As of June 30, 2024, we were in compliance with all debt covenants, current on all loan payments and not otherwise in default under the revolving line of credit, corporate credit facility term loans, mortgage loans or Senior Notes.

Current wording

As of September 30, 2024, we were not in compliance with a debt covenant on one mortgage loan which resulted in an event of default. We cured the default in October 2024 by depositing $2.7 million in an interest-bearing escrow account held by the lender. We were current on all loan payments and not otherwise in default under the revolving line of credit, corporate credit facility term loans, remaining mortgage loans or Senior Notes.

Previous wording

We maintain an ATM program pursuant to the ATM Agreement. In accordance with the terms of the ATM Agreement, the Company may from time to time offer and sell shares of its common stock having an aggregate gross offering price of up to $200 million. No shares were sold under the ATM Agreement during the three and six months ended June 30, 2024. As of June 30, 2024, we had $200 million available for sale under the ATM Agreement.

Current wording

We maintain an ATM program pursuant to the ATM Agreement. In accordance with the terms of the ATM Agreement, the Company may from time to time offer and sell shares of its common stock having an aggregate gross offering price of up to $200 million. No shares were sold under the ATM Agreement during the three and nine months ended September 30, 2024. As of September 30, 2024, we had $200 million available for sale under the ATM Agreement.

Previous wording

During the six months ended June 30, 2024, 468,107 shares were repurchased under the Repurchase Program, at a weighted-average price of $13.51 per share for an aggregate purchase price of $6.3 million. During the six months ended June 30, 2023, 4,445,708 shares were repurchased under the Repurchase Program, at a weighted-average price of $13.20 per share for an aggregate purchase price of $58.7 million. As of June 30, 2024, we had approximately $127.4 million remaining under our share repurchase authorization.

Current wording

During the three and nine months ended September 30, 2024, 146,863 and 614,970 shares were repurchased under the Repurchase Program, at a weighted-average price of $12.78 and $13.34 per share for an aggregate purchase price of $1.9 million an $8.2 million, respectively. During the three and nine months ended September 30, 2023, 2,070,777 and 6,516,485 shares were repurchased under the Repurchase Program, at a weighted-average price of $12.09 and $12.85 per share for an aggregate purchase price of $25.0 million and $83.7 million, respectively. As of September 30, 2024, we had approximately $125.5 million remaining under our share repurchase authorization.

Previous wording

As of June 30, 2024 and December 31, 2023, we had a total of $55.9 million and $49.7 million, respectively, of FF&E reserves. During the three and six months ended June 30, 2024, we made total capital expenditures of $35.8 million and $69.3 million, respectively, and during the three and six months ended June 30, 2023, we made total capital expenditures of $22.4 million and $34.0 million, respectively.

Current wording

As of September 30, 2024 and December 31, 2023, we had a total of $57.3 million and $49.7 million, respectively, of FF&E reserves. During the three and nine months ended September 30, 2024, we made total capital expenditures of $46.9 million and $116.2 million, respectively, and during the three and nine months ended September 30, 2023, we made total capital expenditures of $35.5 million and $69.5 million, respectively.

Previous wording

As of June 30, 2024, we had various contracts outstanding with third-parties in connection with the renovation of certain of our hotel properties. The remaining commitments under these contracts as of June 30, 2024 totaled $70.2 million.

Current wording

As of September 30, 2024, we had various contracts outstanding with third-parties in connection with the renovation of certain of our hotel properties. The remaining commitments under these contracts as of September 30, 2024 totaled $55.5 million.

Previous wording

Comparison of the Six Months Ended June 30, 2024 to the Six Months Ended June 30, 2023

Current wording

Comparison of the Nine Months Ended September 30, 2024 to the Nine Months Ended September 30, 2023

Previous wording

•Cash provided by operating activities was $81.9 million and $100.7 million for the six months ended June 30, 2024 and 2023, respectively. Cash flows from operating activities generally consist of the net cash generated by our hotel operations, partially offset by the cash paid for interest, corporate expenses and other working capital changes. Our cash flows from operating activities may also be affected by changes in our portfolio resulting from hotel acquisitions, dispositions or from disruption and subsequent improvements resulting from renovations. The net decrease to cash provided by operating activities during the six months ended June 30, 2024 was primarily due to the timing of working capital transactions. Refer to the "Results of Operations" section for further discussion of our operating results for the three and six months ended June 30, 2024 and 2023.

Current wording

•Cash provided by operating activities was $133.1 million and $137.9 million for the nine months ended September 30, 2024 and 2023, respectively. Cash flows from operating activities generally consist of the net cash generated by our hotel operations, partially offset by the cash paid for interest, corporate expenses and other working capital changes. Our cash flows from operating activities may also be affected by changes in our portfolio resulting from hotel acquisitions, dispositions or from disruption and subsequent improvements resulting from renovations. The net decrease to cash provided by operating activities during the nine months ended September 30, 2024 was primarily due to the timing of working capital transactions. Refer to the "Results of Operations" section for further discussion of our operating results for the three and nine months ended September 30, 2024 and 2023.

Previous wording

•Cash used in investing activities was $68.0 million and $32.2 million for the six months ended June 30, 2024 and 2023, respectively. Cash used in investing activities for the six months ended June 30, 2024 was attributed to $69.3 million in capital improvements at our hotel properties, which was partially offset by $1.1 million of proceeds from property insurance and $0.2 million of performance guaranty payments received that were recorded as a reduction in the respective hotel's cost basis. Cash used in investing activities for the six months ended June 30, 2023 was attributed to $34.0 million in capital improvements at our hotel properties, which was partially offset by $1.2 million of performance guaranty payments received that were recorded as a reduction in the respective hotel's cost basis and $0.5 million of proceeds from property insurance.

Current wording

•Cash used in investing activities was $84.5 million and $67.6 million for the nine months ended September 30, 2024 and 2023, respectively. Cash used in investing activities for the nine months ended September 30, 2024 was attributed to $116.2 million in capital improvements at our hotel properties, which was partially offset by net proceeds of $29.1 million from the sale of Lorien Hotel & Spa, $2.4 million of proceeds from property insurance and $0.2 million of performance guaranty payments received that were recorded as a reduction in the respective hotel's cost basis. Cash used in investing activities for the nine months ended September 30, 2023 was attributed to $69.5 million in capital improvements at our hotel properties, which was partially offset by $1.4 million of performance guaranty payments received that were recorded as a reduction in the respective hotel's cost basis and $0.5 million of proceeds from property insurance.

Previous wording

•Cash used in financing activities was $31.9 million and $118.0 million for the six months ended June 30, 2024 and 2023, respectively. Cash used in financing activities for the six months ended June 30, 2024 was attributed (i) to the payment of $22.9 million in dividends, (ii) the repurchase of common stock totaling $6.3 million, (iii) principal payments of mortgage debt totaling $1.7 million, (iv) the redemption of Operating Partnership Units for cash of $0.7 million and (v) shares redeemed to satisfy tax withholding on vested share-based compensation of $0.4 million. Cash used in financing activities for the six months ended June 30, 2023 was attributed to (i) the repayment of the existing corporate credit facility term loan maturing in 2024 totaling $125.0 million, (ii) the repayment of mortgage debt totaling $99.5 million, (iii) the repurchase of common stock totaling $58.7 million, (iv) the expenditure of $29.7 million for the repurchase and retirement of $30.0 million aggregate principal of 2020 Senior Notes, (v) the payment of $22.8 million in dividends, (vi) payment of loan fees and issuance costs of $5.6 million, (vii) principal payments of mortgage debt totaling $1.7 million and (viii) shares redeemed to satisfy tax withholding on vested share-based compensation of $0.6 million, which was partially offset (y) by proceeds from the 2023 Term Loans totaling $225.0 million and (z) proceeds from the amendment of one mortgage loan of $0.4 million.

Current wording

•Cash used in financing activities was $47.1 million and $160.2 million for the nine months ended September 30, 2024 and 2023, respectively. Cash used in financing activities for the nine months ended September 30, 2024 was attributed (i) to the payment of $35.4 million in dividends, (ii) the repurchase of common stock totaling $8.2 million, (iii) principal payments of mortgage debt totaling $2.5 million, (iv) the redemption of Operating Partnership Units for cash of $0.7 million and (v) shares redeemed to satisfy tax withholding on vested share-based compensation of $0.4 million. Cash used in financing activities for the nine months ended September 30, 2023 was attributed to (i) the repayment of the existing corporate credit facility term loan maturing in 2024 totaling $125.0 million, (ii) the repayment of mortgage debt totaling $99.5 million, (iii) the repurchase of common stock totaling $83.7 million, (iv) the expenditure of $34.9 million for the repurchase and retirement of $35.3 million aggregate principal of 2020 Senior Notes, (v) the payment of $33.8 million in dividends, (vi) payment of loan fees and issuance costs of $5.6 million, (vii) principal payments of mortgage debt totaling $2.5 million and (viii) shares redeemed to satisfy tax withholding on vested share-based compensation of $0.6 million, which was partially offset (y) by proceeds from the 2023 Term Loans totaling $225.0 million and (z) proceeds from the amendment of one mortgage loan of $0.4 million.

Previous wording

We further adjust FFO for certain additional items that are not in Nareit’s definition of FFO such as terminated transaction and pre-opening expenses, amortization of debt origination costs and share-based compensation, non-cash ground rent and straight-line rent expense, operating results from properties that are sold and other items we believe do not represent recurring operations. We believe that Adjusted FFO provides investors with useful supplemental information that may facilitate comparisons of ongoing operating performance between periods and between REITs that make similar adjustments to FFO and is beneficial to investors’ complete understanding of our operating performance.

Current wording

We further adjust FFO for certain additional items that are not in Nareit’s definition of FFO such as terminated transaction and pre-opening expenses, amortization of debt origination costs and share-based compensation, non-cash ground rent and straight-line rent expense and other items we believe do not represent recurring operations. We believe that Adjusted FFO provides investors with useful supplemental information that may facilitate comparisons of ongoing operating performance between periods and between REITs that make similar adjustments to FFO and is beneficial to investors’ complete understanding of our operating performance.