Company: DRH-PA
Filing Date: 2025-02-28
Form Type: 10-K
Source: 0001298946-25-000015
Chunk: 73

Company: DiamondRock Hospitality Co
Filing Date: 2025-02-28
Form: 10-K
Item: Item 7
Chunk 73
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 facility interest and unused fees1,253 1,256 (3)(0.2)Amortization of debt issuance costs1,967 2,053 (86)(4.2)Interest rate swap mark-to-market— 2,033 (2,033)(100.0)Finance lease expense (1)311 — 311 100.0  $65,516 $65,072 $444 0.7 %

(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 increase in interest expense is primarily the result of elevated interest rates offset by the reduction in mortgage related interest due to the payoff of our Courtyard Midtown mortgage loan in August 2024.

Income taxes. We recorded an income tax expense of $1.5 million in 2024 and income tax expense of $0.3 million in 2023. The increase in income tax expense was the result of a $1.0 million change in our valuation allowance included in our 2023 income tax provision as well as higher state tax expense in 2024. The 2024 income tax provision includes a change in our valuation allowance of $0.2 million. 

Comparison of the Year Ended December 31, 2023 to the Year Ended December 31, 2022 

Discussion of the comparison of the results of operations for the year ended December 31, 2023 to the year ended December 31, 2022 was included in our Annual Report on Form 10-K for the year ended December 31, 2023 on page 49 under Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” which was filed with the SEC on February 28, 2024.

Liquidity and Capital Resources

Our short-term liquidity requirements consist 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. 

On August 6, 2024, we paid off $73.3 million outstanding on the Courtyard New York Manhattan/Midtown East mortgage loan using cash on hand. We have three mortgage loans that mature in the next twelve months. We are actively