The following discussion and analysis should be read in conjunction with the consolidated financial statements and related notes included elsewhere in this report.
Pebblebrook Hotel Trustis a Marylandreal estate investment trust that conducts its operations so as to qualify as a REIT under the Code. Substantially all of the operations are conducted through Pebblebrook Hotel, L.P.(our "Operating Partnership"), a Delawarelimited partnership of which Pebblebrook Hotel Trustis the sole general partner. In this report, we use the terms "the Company", "we" or "our", to refer to Pebblebrook Hotel Trustand its subsidiaries, unless the context indicates otherwise.
March 2020, the World Health Organizationdeclared the novel coronavirus ("COVID-19") to be a global pandemic and the virus spread throughout the United Statesand the world. As a result of this pandemic and subsequent government mandates, health official recommendations, corporate policy changes and individual responses, hotel demand dramatically declined and we implemented significant cost controls, salary reductions and the temporary suspension of operations at 47 of our properties in 2020, along with other actions to improve liquidity. All of our properties reopened in 2021 with the exception of 1 Hotel San Francisco(formerly Hotel Vitale), whose operations remained suspended until the completion of its renovations and repositioning in June 2022. Demand has significantly improved throughout 2022 led by strong leisure travel demand with a significant improvement in business travel compared to 2021. Recent inflation and the expectation of future inflation have caused labor, capital and other costs to increase and the reaction by the Federal Reserveto rapidly and substantially increase interest rates has created economic uncertainty and significant concerns and risk of an economic downturn, softening or recession. During 2022, we acquired Inn on Fifth in Naples, Floridaand Newport Harbor Island Resort(formerly Gurney's Newport Resort& Marina) in Newport, Rhode Islandfor a gross purchase price of $330.0 millionand we sold four hotels in separate transactions for aggregate sales prices of $260.9 million. In addition, as of December 31, 2022we have entered into an agreement to sell The Heathman Hotelin Portland, Oregonfor $45.0 million, however, no assurances can be given that the sale will be completed on these terms or at all.
facility and all of the term loans. Our new
provides for a
During the fourth quarter of 2022, we repurchased 4,559,839 common shares for an aggregate purchase price of
$69.6 millionunder our existing common share repurchase programs. In addition, following an unsolicited private inquiry, we repurchased 1,000,000 shares of outstanding 5.70% Series H Cumulative Redeemable Preferred Shares for $16.0 millionwhich was a discount to their $25.0 millionliquidation value. In September 2022, our LaPlaya Beach Resort & Clubsustained damage as a result of Hurricane Ian and closed. We have continued to make progress completing significant repairs and rebuilding at the property. The resort will be reopened in stages through the middle of 2023. The first building reopened for guests in January 2023. 38 -------------------------------------------------------------------------------- While we do not operate our hotel properties, both our asset management team and our executive management team monitor and work cooperatively with our hotel managers by advising and making recommendations in all aspects of our hotels' operations, including property positioning and repositioning, revenue and expense management, operations analysis, physical design, renovation and capital improvements, guest experience and overall strategic direction. Through these efforts, we seek to improve property efficiencies, lower costs, maximize revenues and enhance property operating margins, which we expect will enhance returns to our shareholders.
Key Indicators of Financial Condition and Operating Performance
We measure hotel results of operations and the operating performance of our business by evaluating financial and non-financial metrics such as room revenue per available room ("RevPAR"); total revenue per available room ("Total RevPAR"); average daily rate ("ADR"); occupancy rate ("Occupancy"); funds from operations ("FFO"); earnings before interest, income taxes, depreciation and amortization ("EBITDA"); and EBITDA for real estate ("EBITDAre"). We evaluate individual hotel and company-wide performance with comparisons to budgets, prior periods and competing properties. ADR, occupancy and RevPAR may be impacted by macroeconomic factors as well as regional and local economies and events. See Non-GAAP Financial Measures for further discussion of FFO, EBITDA and EBIDTAre.
The following table represents the key same-property hotel operating statistics
for our hotels for the years ended
For the year ended December 31, 2022 2021 Same-Property Occupancy 62.6 % 43.0 % Same-Property ADR
$ 308.00 $ 268.23Same-Property RevPAR $ 192.83 $ 115.44
Same-Property Total RevPAR
The above table of hotel operating statistics includes information from all hotels owned as of
December 31, 2022except for 1 Hotel San Francisco(formerly Hotel Vitale) for 2022 and 2021 due to its closure for renovation from the third quarter of 2021 to the second quarter of 2022, Inn on Fifth for the first quarter of 2022 and 2021 due to its acquisition on May 11, 2022, Newport Harbor Island Resort(formerly Gurney's Newport Resort& Marina) for the first and the second quarters of 2022 and 2021 due to its acquisition on June 23, 2022and LaPlaya Beach Resort & Clubfor the fourth quarter of 2022 and 2021 due to its closure following Hurricane Ian. Additionally, the schedule excludes The Marker San Franciscofor the second, third and fourth quarters of 2022 and 2021 due to its sale on June 28, 2022, Sofitel Philadelphia at Rittenhouse Squarefor the third and fourth quarters of 2022 and 2021 due to its sale on August 2, 2022, Hotel Sperofor the third and fourth quarters of 2022 and 2021 due to its sale on August 25, 2022and Hotel Vintage Portlandfor the third and fourth quarters of 2022 and 2021 due to its sale on September 14, 2022.
Results of Operations
This section includes comparisons of certain 2022 financial information to the same information for 2021. Year-to-year comparisons of the 2021 financial information to the same information for 2020 are contained in Part II, Item 7 of our Annual Report on Form 10-K for the year ended
December 31, 2021filed with the SECon February 22, 2022. 39 -------------------------------------------------------------------------------- At December 31, 2022and 2021, our consolidated financial statements included the operations of 51 and 53 hotel properties, respectively, which have been included in our results of operations during the respective periods since their dates of acquisition or through their dates of disposition. Based on when a property was acquired or disposed, operating results for certain properties are not comparable for the years ended December 31, 2022and 2021. The properties listed in the table below are hereinafter referred to as "non-comparable properties" for the periods indicated and all other properties are referred to as "comparable properties": Property Location Disposition Date Sir Francis Drake San Francisco, CA April 1, 2021 The Roger New York New York, NY June 10, 2021 Villa Florence San Francisco on Union Square San Francisco, CA September 9, 2021 The Marker San Francisco San Francisco, CA June 28, 2022 Sofitel Philadelphia at Rittenhouse Square Philadelphia, PA August 2, 2022 Hotel Spero San Francisco, CA August 25, 2022 Hotel Vintage Portland Portland, OR September 14, 2022 Property Location Acquisition Date Jekyll Island Club Resort Jekyll Island, GA July 22, 2021 Margaritaville Hollywood Beach Resort Hollywood, FL September 23, 2021 Estancia La Jolla Hotel & Spa La Jolla, CA December 1, 2021 Inn on Fifth Naples, FL May 11, 2022 Newport Harbor Island Resort(formerly Gurney's Newport Resort & Marina) Newport, RI June 23, 2022
Comparison of the year ended
Revenues - Total revenues increased by
$658.8 million, of which $157.9 millionwas due to non-comparable properties, and the balance was primarily due to an increase in leisure and business travel in 2022. In addition, several of our hotels remained temporarily suspended throughout the first quarter of 2021. Hotel operating expenses - Total hotel operating expenses increased by $386.9 million, of which $93.9 millionwas due to non-comparable properties, and the balance was primarily due to resuming operations at our comparable properties and returning demand in 2022. Depreciation and amortization - Depreciation and amortization expense increased by $15.3 millionprimarily due to our property acquisitions in 2021 and 2022, offset by a decrease in depreciation from the properties sold in 2021 and 2022. Real estate taxes, personal property taxes, property insurance and ground rent - Real estate taxes, personal property taxes, property insurance and ground rent increased by $14.5 millionprimarily due to an increase at our three non-comparable properties acquired in 2021. General and administrative - General and administrative expense increased by $1.0 milliondue to compensation expense, offset by a decrease in legal fees. General and administrative expense consists of employee compensation costs, legal and professional fees, insurance and other expenses. Impairment and other losses - We recognized impairment and other losses of $89.9 millionin 2022 related to three properties as well as an impairment related to damage caused by Hurricane Ian at LaPlaya Beach Resort & Clubin Naples, Floridaand Southernmost Beach Resortin Key West, Florida. We recognized an impairment loss of $14.9 millionin 2021 related to one hotel. Gain on sale of hotel properties - We recognized a gain on sale of $6.2 millionrelated to the sales of Sofitel Philadelphia Rittenhouse Squareand Hotel Vintage Portlandin 2022. We recognized a gain on sale of $64.7 millionin 2021 primarily due to the sale of Sir Francis Drake.
Other operating expenses - Other operating expenses increased by
primarily due to an increase in pre-opening expenses and hotel management
Interest expense - Interest expense increased by
refinancing costs incurred in conjunction with the refinancing of our senior
unsecured credit facility on
Non-controlling interests - Non-controlling interests represent the allocation of income or loss of the
Operating Partnershipto third-party common OP unit holders and to the preferred OP unit holders. In 2022, this amount includes $3.0 millionin preferred distributions to the holders of Series Z Preferred Units which were issued in May 2022. 40 -------------------------------------------------------------------------------- Distributions to preferred shareholders - Distributions to preferred shareholders increased as a result of the issuance of the Series G Preferred Shares and Series H Preferred Shares in May 2021and July 2021, respectively, being outstanding for all of 2022. Redemption of preferred shares - Redemption of preferred shares in 2022 relates to the repurchase of one million Series H Preferred Shares for a repurchase amount below the carrying value, net of issuance costs of the shares redeemed. The Company redeemed the Series C and Series D Cumulative Redeemable Preferred Shares in August 2021at the carrying value and therefore the redemption of preferred shares in 2021 represented the issuance costs associated with the shares redeemed. These costs are included in the determination of net income (loss) attributable to common shareholders.
Non-GAAP Financial Measures
Non-GAAP financial measures are measures of our historical or future financial
performance that are different from measures calculated and presented in
non-GAAP financial measures that we believe are useful to investors as key
measures of our operating performance.
We calculate FFO in accordance with standards established by Nareit, formerly known as the
National Association of Real Estate Investment Trusts, which defines FFO as net income (calculated in accordance with U.S.GAAP), excluding real estate related depreciation and amortization, gains (losses) from sales of real estate, impairments of real estate assets (including impairment of real estate related joint ventures), the cumulative effect of changes in accounting principles and adjustments for unconsolidated partnerships and joint ventures. Historical cost accounting for real estate assets implicitly assumes that the value of real estate assets diminishes predictably over time. Since real estate values instead have historically risen or fallen with market conditions, most industry investors consider presentations of operating results for real estate companies that use historical cost accounting to be insufficient by themselves. By excluding the effect of real estate related depreciation and amortization including our share of the joint venture depreciation and amortization, gains (losses) from sales of real estate and impairments of real estate assets (including impairment of real estate related joint ventures), all of which are based on historical cost accounting and which may be of lesser significance in evaluating current performance, we believe that FFO provides investors a useful financial measure to evaluate our operating performance. The following table reconciles net income (loss) to FFO and FFO available to common share and unit holders for the years ended December 31, 2022, 2021 and 2020 (in thousands): For the year ended December 31, 2022 2021 2020 Net income (loss) $ (84,981) $ (186,372) $ (392,593)Adjustments: Real estate depreciation and amortization 239,231 223,813 224,124 (Gain) loss on sale of hotel properties (6,194) (64,729) (117,401) Impairment loss 89,633 14,856 74,556 FFO $ 237,689 $ (12,432) $ (211,314)Distribution to preferred shareholders and unit holders (48,049) (42,105) (32,556) Redemption of preferred shares 8,186 (8,055) - FFO available to common share and unit holders $ 197,826
EBITDA is defined as earnings before interest, income taxes, depreciation and amortization. The white paper issued by Nareit entitled "Earnings Before Interest, Taxes, Depreciation and Amortization for Real Estate" defines EBITDAre as net income or loss (computed in accordance with
U.S.GAAP), excluding interest expense, income tax, depreciation and amortization, gains or losses on the disposition of depreciated property (including gains or losses on change of control), impairment write-downs of depreciated property and of investments in unconsolidated affiliates caused by a decrease in value of depreciated property in the affiliate, and after comparable adjustments for our portion of these items related to unconsolidated affiliates. We believe that EBITDA and EBITDAre provide investors useful financial measures to evaluate our operating performance, excluding the impact of our capital structure (primarily interest expense) and our asset base (primarily depreciation and amortization). 41 --------------------------------------------------------------------------------
The following table reconciles net income (loss) to EBITDA and EBITDAre for the
For the year ended December 31, 2022 2021 2020 Net income (loss)
$ (84,981) $ (186,372) $ (392,593)Adjustments: Interest expense 99,988 96,633 104,098 Income tax expense (benefit) 277 61 (3,697) Depreciation and amortization 239,583 224,251 224,560 EBITDA $ 254,867 $ 134,573 $ (67,632)(Gain) loss on sale of hotel properties (6,194) (64,729) (117,401) Impairment loss 89,633 14,856 74,556 EBITDAre $ 338,306 $ 84,700 $ (110,477)FFO, EBITDA and EBITDAre do not represent cash generated from operating activities as determined by U.S.GAAP and should not be considered as alternatives to U.S.GAAP net income (loss), as indications of our financial performance, or to U.S.GAAP cash flow from operating activities, as measures of liquidity. In addition, FFO, EBITDA and EBITDAre are not indicative of funds available to fund cash needs, including the ability to make cash distributions.
Critical Accounting Policies
We consider these policies critical because they require estimates about matters that are inherently uncertain, involve various assumptions and require significant management judgment, and because they are important for understanding and evaluating our reported financial results. These judgments affect the reported amounts of assets and liabilities and our disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenue and expenses during the reporting periods. Applying different estimates or assumptions may result in materially different amounts reported in our financial statements.
Investment in Hotel Properties
Estimation and judgment are required to determine the fair values of our acquired hotel properties. Upon acquiring a business or hotel property, we measure and recognize the fair value of the acquired land, land improvements, building, furniture, fixtures and equipment, identifiable intangible assets or liabilities, other assets and assumed liabilities. Identifiable intangible assets or liabilities typically arise from contractual arrangements assumed in connection with the transaction, including terms that are above or below market compared to an estimated market agreement at the acquisition date. We determine the acquisition-date fair values of all assets and assumed liabilities using a combination of the market, cost and income approaches. These valuation methodologies are based on significant Level 2 and Level 3 inputs in the fair value hierarchy, such as estimates of future income growth, capitalization rates, discount rates, capital expenditures and cash flow projections, including hotel revenues and net operating income, at the respective hotel properties. Estimates of future cash flows are based on a number of factors including historical operating results, known and anticipated trends, and market and economic conditions. Transaction costs are expensed for acquisitions that are considered business combinations and capitalized for asset acquisitions.
We review our investments in hotel properties for impairment whenever events or changes in circumstances indicate that the carrying value of the hotel properties may not be recoverable. Events or circumstances that may cause a review include, but are not limited to, when a hotel property experiences a current or projected loss from operations, when it becomes more likely than not that a hotel property will be sold before the end of its useful life, adverse changes in the demand for lodging at the properties due to declining national or local economic conditions and/or new hotel construction in markets where the hotels are located. When such conditions exist, we perform an analysis to determine if the estimated undiscounted future cash flows from operations and the proceeds from the ultimate disposition of a hotel exceed its carrying value. If the estimated undiscounted future cash flows are less than the carrying amount of the asset, an adjustment to reduce the carrying amount to the related hotel's estimated fair market value is recorded and an impairment loss recognized. In the evaluation of impairment of our hotel properties, we make many assumptions and estimates including projected cash flows both from operations and eventual disposition, expected useful life and holding period, future required capital expenditures, and fair values, including consideration of capitalization rates, discount rates, and comparable selling prices. We will adjust our assumptions with respect to the remaining useful life of the hotel property when circumstances change, such as an expiring ground lease or it is more likely than not that the hotel property will be sold prior to its previously expected useful life. 42 --------------------------------------------------------------------------------
New Accounting Pronouncements
See Note 2. Summary of Significant Accounting Policies to our consolidated
financial statements included in Part IV, Item 15 of this Annual Report on Form
10-K for recently issued accounting pronouncements that may affect us.
Liquidity and Capital Resources
Our primary sources of liquidity are cash provided by our operations, borrowings under our credit facilities, net proceeds from equity and debt offerings, and net proceeds from property sales. Our primary cash requirements in the short term (i.e., those requiring cash before
January 1, 2024) will be to fund property lease obligations, interest and current principal on debt, capital improvements, dividends on common and preferred shares, and working capital of our property operations. We believe our cash and cash equivalents, restricted cash and the amount available on our senior unsecured revolving credit facility, which totaled $689.7 millionas of December 31, 2022, along with cash generated from ongoing operations will be sufficient to satisfy our short-term cash requirements. As of December 31, 2022we had no off-balance sheet arrangements. In order to maintain our qualification as a REIT, we must pay dividends to our shareholders of at least 90% of our taxable income. As a result of this requirement, we cannot rely on retained earnings to fund long-term liquidity requirements such as hotel property acquisitions, redevelopements and repayments of long-term debt. As such, we expect to continue to raise capital through equity and debt offerings to fund our growth.
Our material cash requirements include the following contractual and other
Our outstanding debt consisted of floating- and fixed-rate unsecured term loans, convertible senior notes, senior unsecured notes and mortgage loans with varying maturities. Our total debt had an aggregate face value of
$2.4 billionas of December 31, 2022, as summarized below. December 31, 2022 (in thousands) Revolving credit facilities $ - Term loans 1,380,000 Convertible senior notes 750,000 Senior unsecured notes 50,000 Mortgage loans 220,985 Total debt at face value $ 2,400,985For further discussion on the components of our debt, see Note 5. Debt to our consolidated financial statements included in Part IV, Item 15 of this Annual Report on Form 10-K. We have the option to extend certain of our current debt maturities with the payment of extension fees. Assuming we exercise all extension options available in our debt agreements, we expect that future principal and interest payments associated with our debt obligations outstanding as of December 31, 2022will be $2.7 billionthrough their maturity, with $49.6 millionof principal and $93.0 millionof interest payable on or before January 1, 2024. We intend to pay amounts due with available cash, borrowings under our revolving credit facility, or refinance with long term debt.
We are in compliance with all covenants governed by our existing credit
facilities, term loan and senior note facilities.
Our mortgage loans contain customary provisions regarding events of default, as well as customary cash management, cash trap and lockbox provisions. Cash trap provisions may be triggered if the hotel's performance is below a certain threshold. Once triggered, all of the cash flow generated by the hotel is deposited directly into lockbox accounts and then swept into cash management accounts for the benefit of our lender. As of
December 31, 2022, none of the mortgage loans were in a cash trap.
Hotel, ground and finance lease obligations
Our properties that are subject to hotel, ground or finance leases, as noted in Note 11. Commitment and Contingencies to our consolidated financial statements included in Part IV, Item 15 of this Annual Report on Form 10-K, may require minimum fixed rent payments, percentage rent payments based on a percentage of revenues in excess of certain thresholds or rent payments equal to the greater of a minimum fixed rent or percentage rent. Minimum fixed rent may be adjusted annually by increases in consumer price index ("CPI") and may be subject to minimum and maximum increases.
Future fixed minimum payments associated with our hotel, ground and finance
December 31, 2022, we had $5.5 millionof outstanding purchase commitments, all of which will be paid on or before December 31, 2023. These purchase commitments represent outstanding purchase orders and contracts that have been executed for capital and renovation projects at our properties. See Capital Investments for discussion on planned capital investments.
Preferred dividends and Series Z operating partnership units
We expect to pay aggregate annual dividends and distributions of approximately
$48.6 millionon our outstanding Series E, Series F, Series G and Series H Cumulative Redeemable Preferred Shares and Series Z Cumulative Perpetual Preferred Units on or before December 31, 2023and in future years until the shares/units are redeemed. For further discussion on our preferred shares and preferred units, see Note 7. Equity to our consolidated financial statements included in Part IV, Item 15 of this Annual Report on Form 10-K.
Sources and Uses of Cash
Our principal sources of cash are cash from operations, draws on our credit facilities, net proceeds from equity and debt offerings, and net proceeds from property sales. Our principal uses of cash are asset acquisitions, debt service payments, the redemption of equity securities, capital investments, operating costs, corporate expenses and dividends. Operating Activities. Our net cash provided by operating activities was
$278.7 millionfor the year ended December 31, 2022and $70.8 millionfor the year ended December 31, 2021. Fluctuations in our net cash provided by operating activities are primarily the result of changes in hotel revenues, operating cash requirements and corporate expenses. The increase in cash provided by operations in 2022 as compared to 2021 is due to the resumption of operations at our hotels and continued improvement in travel demand. In addition, the operations at several of our hotels were temporarily suspended throughout the first quarter of 2021 but were operating in 2022.
Investing Activities. Our net cash used in investing activities was
activities are primarily the result of acquisition and disposition activities,
as well as capital improvements and additions to our properties.
•During the year ended
improvements to our hotel properties, received
four hotel properties and purchased two hotel properties using cash of
•During the year ended
December 31, 2021, we invested $83.8 millionin improvements to our hotel properties, received $255.9 millionfrom the sale of three hotel properties and purchased three hotel properties using cash of $253.5 million.
Financing Activities. Our net cash used in financing activities was
activities are primarily the result of our issuance and repurchase of debt and
equity securities and distributions paid on our preferred and common shares.
•During the year ended
December 31, 2022, we borrowed and repaid $190.2 millionof revolving credit facility borrowings, repaid and borrowed $1.4 billionin other debt, repurchased $70.7 millionof common shares through our common share repurchase program, paid $52.7 millionin preferred and common distributions, used $16.0 millionto redeem one million Series H Preferred Shares and paid $12.4 millionin financing fees. •During the year ended December 31, 2021, we received gross proceeds of $480.0 millionfrom the issuance of our Series G and Series H Preferred Shares, which was partially offset by the payment $15.9 millionin offering costs, received proceeds from the issuance of convertible notes and other debt of $268.6 million, repaid $392.2 millionin other debt and $40.0 millionof revolving credit facilities borrowings, used $250.0 millionto redeem all our Series C and Series D Preferred Shares, paid $44.7 millionin preferred and common distributions, purchased $21.0 millionin Capped Call Transactions and paid $14.5 millionin financing fees. 44 --------------------------------------------------------------------------------
We maintain and intend to continue maintaining all of our hotels in good repair and condition, in conformity with applicable laws and regulations, in accordance with franchisor standards when applicable and in accordance with agreed-upon requirements in our management agreements. Routine capital investments will be administered by the hotel management companies. However, we maintain approval rights over the capital investments as part of the annual budget process and as otherwise required from time to time. Certain of our hotel properties may undergo renovations as a result of our decision to upgrade portions of the hotels, such as guest rooms, meeting space and restaurants, in order to better compete with other hotels in our markets. In addition, after we acquire a hotel property, we are often required by the franchisor or brand manager, if any, to complete a property improvement plan ("PIP") in order to bring the hotel property up to the franchisor's or brand's standards. Generally, we expect to fund renovations and improvements with available cash, restricted cash, borrowings under our credit facility or proceeds from new debt or equity offerings. For the year ended
December 31, 2022, we invested $116.7 millionin capital investments to reposition and improve our properties, including the renovations of 1 Hotel San Francisco(formerly Hotel Vitale), Hotel Ziggy(formerly Graftonon Sunset) and Skamania Lodge. Depending on market conditions, and in some instances subject to approval from governmental authorities, we expect to invest an additional $145.0 millionto $155.0 millionin capital investments in 2023, which includes normal hotel capital refurbishments, return of investment projects and major capital projects. We have the following significant capital projects that are expected to be completed in 2023 or 2024: •$25.0 million comprehensive redevelopment and renovation of Hilton San Diego Gaslamp Quarter, which commenced in 2022 and is expected to be completed in the second quarter of 2023; •$27.0 million comprehensive redevelopment and repositioning of Solamar Hotelinto Margaritaville Hotel San Diego Gaslamp Quarter, which commenced in 2022 and is expected to be completed in the second quarter of 2023; •$20.0 million to $22.0 millioncomprehensive renovation at Jekyll Island Club Resort, which commenced in 2022 and is expected to be completed in the second quarter of 2023;
•$20.0 million to
Hotel & Spa
second quarter of 2024; and
•$11.0 million first phase of a multi-phase master plan at
commenced in 2022 and is expected to be completed in the third quarter of 2023.
Common Share Repurchase Programs, Preferred Share Repurchase Program and ATM
February 22, 2016, we announced that our Board of Trusteesauthorized a share repurchase program of up to $150.0 millionof the Company's outstanding common shares. Under this program, we may repurchase common shares from time to time in transactions on the open market or by private agreement. We may suspend or discontinue this program at any time. Upon repurchase by the Company, common shares cease to be outstanding and become authorized but unissued common shares. For the year ended December 31, 2022, the Company made $56.6 millionin repurchases under this program and, as of December 31, 2022, no common shares remained available for repurchase under this program. On July 27, 2017, we announced that our Board of Trusteesauthorized a new share repurchase program of up to $100.0 millionof the Company's outstanding common shares. Under this program, we may repurchase common shares from time to time in transactions on the open market or by private agreement. We may suspend or discontinue this program at any time. For the year ended December 31, 2022, the Company made $13.0 millionin repurchases under this program and, as of December 31, 2022, $87.0 millionof common shares remained available for repurchase under this program. On February 21, 2023, we announced that our Board of Trusteesauthorized a new share repurchase program of up to $150.0 millionof the Company's outstanding common shares. Under this program, we may repurchase common shares from time to time in transactions on the open market or by private agreement. This $150.0 millioncommon share repurchase program will commence upon the completion of the Company's $100.0 millioncommon share repurchase program, under which approximately $74.0 millionof common shares remained available for repurchase as of February 21, 2023. The timing, manner, price and amount of any repurchases under the program will be determined by us in our discretion and will depend on a variety of factors, including legal requirements, price, liquidity and economic considerations, and market conditions. The program does not require us to repurchase any specific number of common shares. The program does not have an expiration date and may be suspended, modified or discontinued at any time. On February 21, 2023, we announced that our Board of Trusteesapproved a repurchase program of up to $100.0 millionof our outstanding preferred shares (the "Preferred Share Repurchase Program"). Under the terms of the program, we may repurchase up to an aggregate of $100.0 millionof our 6.375% Series E Cumulative Redeemable Preferred Shares, 6.30% 45 -------------------------------------------------------------------------------- Series F Cumulative Redeemable Preferred Shares, 6.375% Series G Cumulative Redeemable Preferred Shares and 5.70% Series H Cumulative Redeemable Preferred Shares from time to time in transactions on the open market or by private agreement. The aggregate liquidation value of our preferred shares that may be repurchased pursuant to the Preferred Shares Repurchase Program, as of February 21, 2023, was $715.0 million. The timing, manner, price and amount of any repurchases will be determined by us in our discretion and will depend on a variety of factors, including legal requirements, price, liquidity and economic considerations, and market conditions. The program does not require us to repurchase any specific number of preferred shares. The program does not have an expiration date and may be suspended, modified or discontinued at any time. On April 29, 2021, we filed a prospectus supplement with the SECto sell up to $200.0 millionof common shares under an "at the market" offering program (the "ATM program"). No common shares were issued or sold under the ATM program during the year ended December 31, 2022. As of December 31, 2022, $200.0 millionof common shares remained available for issuance under the ATM program.
We rely on the performance of the hotels to increase revenues to keep pace with inflation. Generally, our hotel operators possess the ability to adjust room rates daily, except for group or corporate rates contractually committed to in advance, although competitive pressures may limit the ability of our operators to raise rates faster than inflation or even at the same rate.
For discussion on the seasonality of our hotels' operations, see Part I, Item 1
of this Annual Report on Form 10-K.
In the normal course of business, we are exposed to the effects of interest rate changes. We may enter into derivative instruments including interest rate swaps, caps and collars to manage or hedge interest rate risk. Derivative instruments are subject to fair value reporting at each reporting date and the increase or decrease in fair value is recorded in net income (loss) or accumulated other comprehensive income (loss), based on the applicable hedge accounting guidance. Derivatives expose the Company to credit risk in the event of non-performance by the counter parties under the terms of the interest rate hedge agreements. We believe we minimize the credit risk by transacting with major credit-worthy financial institutions. As of
December 31, 2022, we have interest rate swap agreements with an aggregate notional amount of $1.0 billionto hedge variable interest rates on our unsecured term loans. We have designated these pay-fixed, receive-floating interest rate swap derivatives as cash flow hedges. For a further discussion of our derivative instruments see Note 5, Debt, to our consolidated financial statements included in Part IV, Item 15 of this Annual Report on Form 10-K.
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