Company: DRH-PA
Filing Date: 2025-08-08
Form Type: 10-Q
Source: 0001298946-25-000077
Chunk: 39

Company: DiamondRock Hospitality Co
Filing Date: 2025-08-08
Form: 10-Q
Item: Part I, Item 1
Chunk 39
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$22,755 $(1,125)(4.9)%Mortgage debt interest5,791 8,044 (2,253)(28.0)%Credit facility interest and unused fees620 623 (3)(0.5)%Amortization of debt issuance costs1,056 1,026 30 2.9 %Finance lease expense(1)929 — 929 — % $30,026 $32,448 $(2,422)(7.5)%

(1)In October 2024, we extended the term on one of our ground leases, and, as a result, the lease classification changed from an operating lease to a finance lease.

The decrease in interest expense is primarily due to the maturities of the mortgage loans secured by the Courtyard New York Manhattan/Midtown East in the third quarter of 2024 and the Worthington Renaissance Fort Worth Hotel in the second quarter of 2025, as well as a lower SOFR rate in 2025.

Liquidity and Capital Resources

Our short-term liquidity requirements consists primarily of funds necessary to pay our scheduled debt service, near term debt maturities, operating expenses, ground lease payments, capital expenditures directly associated with our hotels, any share repurchases, distributions to our common and preferred stockholders, and the cost of acquiring additional hotels. 

As of June 30, 2025, we had two mortgage loans with maturities in July and November of 2025. On July 3, 2025, we repaid the mortgage loan secured by the Hotel Clio, using proceeds from our senior unsecured revolving credit facility. We subsequently repaid the draw on our senior unsecured revolving credit facility using the proceeds from our Amended Credit Facility. In addition, we plan to use proceeds from our Amended Credit Facility to repay the remaining mortgage loan that matures in November 2025. As of June 30, 2025, we had $400.0 million of borrowing capacity under our senior unsecured revolving credit facility.

Our mortgage debt agreements contain “cash trap” provisions that are triggered when the hotel’s operating results fall below a certain debt service coverage ratio. When these provisions are triggered, all of the excess cash flow generated by the hotel is deposited directly into cash management accounts for the benefit of our lenders until a specified debt service coverage ratio is reached and maintained for a certain period of time. Such provisions do not allow the lender the