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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________________________________________
FORM 10-Q
 _______________________________________________
☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For quarterly period ended March 31, 2022

OR
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

COMMISSION FILE NO. 1-38012
 Playa Hotels & Resorts N.V.
(Exact name of registrant as specified in its charter)
TheNetherlands 98-1346104
       (State or other jurisdiction of incorporation or organization) (IRS Employer Identification Number)
Nieuwezijds Voorburgwal 104 
1012 SGAmsterdam,
theNetherlandsNot Applicable
 (Address of Principal Executive Offices) (Zip Code)
+31 6 82 55 84 30
(Registrant's Telephone Number, Including Area Code)
 
Securities registered pursuant to Section 12(b) of the Act:
Title of each ClassTrading Symbol(s)Name of Each Exchange on Which Registered
Ordinary Shares, €0.10 par valuePLYAThe Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past ninety (90) days.    Yes ☒   No  ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☒      No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer☒Accelerated filer☐
Non-accelerated filer  ☐Smaller reporting company         ☐
Emerging growth company☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐ 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).    Yes  ☐    No  ☒  

As of April 29, 2022, there were 165,778,067 shares of the registrant’s ordinary shares, €0.10 par value, outstanding.


Playa Hotels & Resorts N.V.
TABLE OF CONTENTS
   
Page
Item 1.
 
 
 
 
Item 2.
Item 3.
Item 4.
Item 1.
Item 1A.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.


PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

Playa Hotels & Resorts N.V.
Condensed Consolidated Balance Sheets
($ in thousands, except share data)
(unaudited)
As of March 31,As of December 31,
20222021
ASSETS
Cash and cash equivalents$299,802 $270,088 
Restricted cash24,363 23,489 
Trade and other receivables, net61,660 45,442 
Accounts receivable from related parties12,927 7,981 
Inventories18,801 18,076 
Prepayments and other assets38,912 38,640 
Property and equipment, net1,569,739 1,584,574 
Goodwill, net61,654 61,654 
Other intangible assets7,340 7,632 
Total assets$2,095,198 $2,057,576 
LIABILITIES AND SHAREHOLDERS' EQUITY
Trade and other payables$160,474 $160,222 
Payables to related parties7,312 5,050 
Income tax payable 980 828 
Debt942,553 944,847 
Related party debt195,161 194,472 
Derivative financial instruments 8,515 22,543 
Other liabilities30,136 29,882 
Deferred tax liabilities70,470 68,898 
Total liabilities1,415,601 1,426,742 
Commitments and contingencies (see Note 7)
Shareholders' equity
Ordinary shares (par value €0.10; 500,000,000 shares authorized, 167,986,071 shares issued and 165,778,067 shares outstanding as of March 31, 2022 and 166,646,284 shares issued and 164,438,280 shares outstanding as of December 31, 2021)
18,670 18,518 
Treasury shares (at cost, 2,208,004 shares as of March 31, 2022 and December 31, 2021)
(16,697)(16,697)
Paid-in capital1,180,584 1,177,380 
Accumulated other comprehensive loss(16,011)(18,671)
Accumulated deficit(486,949)(529,696)
Total shareholders' equity 679,597 630,834 
Total liabilities and shareholders' equity $2,095,198 $2,057,576 
The accompanying Notes form an integral part of the Condensed Consolidated Financial Statements.
1
Playa Hotels & Resorts N.V.
Condensed Consolidated Statements of Operations
($ in thousands, except share data)
(unaudited)
Three Months Ended March 31,
20222021
Revenue
Package$184,109 $63,894 
Non-package32,456 12,995 
Management fees1,057 344 
Cost reimbursements1,952 513 
Total revenue219,574 77,746 
Direct and selling, general and administrative expenses
Direct106,840 60,221 
Selling, general and administrative37,239 24,668 
Depreciation and amortization19,500 20,883 
Reimbursed costs1,952 513 
Impairment loss— 24,011 
Loss on sale of assets— 273 
Direct and selling, general and administrative expenses165,531 130,569 
Operating income (loss)54,043 (52,823)
Interest expense(9,168)(18,167)
Other expense(514)(706)
Net income (loss) before tax44,361 (71,696)
Income tax (provision) benefit(1,614)1,951 
Net income (loss)$42,747 $(69,745)
Earnings (loss) per share
Basic$0.26 $(0.43)
Diluted$0.26 $(0.43)
Weighted average number of shares outstanding during the period - Basic165,743,382 160,827,261 
Weighted average number of shares outstanding during the period - Diluted166,888,129 160,827,261 
The accompanying Notes form an integral part of the Condensed Consolidated Financial Statements.
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Playa Hotels & Resorts N.V.
Condensed Consolidated Statements of Comprehensive Income (Loss)
($ in thousands)
(unaudited)
Three Months Ended March 31,
20222021
Net income (loss)$42,747 $(69,745)
Other comprehensive income, net of taxes
Gain on interest rate swaps2,894 2,894 
Pension obligation loss(234)(11)
Total other comprehensive income2,660 2,883 
Comprehensive income (loss)$45,407 $(66,862)
The accompanying Notes form an integral part of the Condensed Consolidated Financial Statements.
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Playa Hotels & Resorts N.V.
Condensed Consolidated Statements of Shareholders' Equity
($ in thousands, except share data)
(unaudited)
Ordinary SharesTreasury SharesPaid-In CapitalAccumulated Other
Comprehensive Loss		Accumulated DeficitTotal
SharesAmountSharesAmount
Balance at December 31, 2020134,571,290 $14,871 2,198,796 $(16,642)$1,030,148 $(30,949)$(436,606)$560,822 
Cumulative effect of accounting changes, net of tax— — — — — — (3,408)(3,408)
Balance at January 1, 2021134,571,290 $14,871 2,198,796 $(16,642)$1,030,148 $(30,949)$(440,014)$557,414 
Net loss— — — — — — (69,745)(69,745)
Other comprehensive income— — — — — 2,883 — 2,883 
Share-based compensation, net of tax withholdings708,285 87 9,208 (55)3,092 — — 3,124 
Equity issuance28,750,000 3,512 — — 134,204 — — 137,716 
Balance at March 31, 2021164,029,575 $18,470 2,208,004 $(16,697)$1,167,444 $(28,066)$(509,759)$631,392 

Ordinary SharesTreasury SharesPaid-In CapitalAccumulated Other
Comprehensive Loss		Accumulated DeficitTotal
SharesAmountSharesAmount
Balance at December 31, 2021164,438,280 $18,518 2,208,004 $(16,697)$1,177,380 $(18,671)$(529,696)$630,834 
Net income— — — — — — 42,747 42,747 
Other comprehensive income— — — — — 2,660 — 2,660 
Share-based compensation1,339,787 152 — — 3,204 — — 3,356 
Balance at March 31, 2022165,778,067 $18,670 2,208,004 $(16,697)$1,180,584 $(16,011)$(486,949)$679,597 
The accompanying Notes form an integral part of the Condensed Consolidated Financial Statements.
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Playa Hotels & Resorts N.V.
Condensed Consolidated Statements of Cash Flows
($ in thousands)
(unaudited)
Three Months Ended March 31,
20222021
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)$42,747 $(69,745)
Adjustments to reconcile net income (loss) to net cash from operating activities
Depreciation and amortization19,500 20,883 
Amortization of debt discount and issuance costs1,019 1,011 
Share-based compensation3,356 3,179 
Gain on derivative financial instruments(11,134)(2,635)
Impairment loss— 24,011 
Deferred income taxes1,572 (2,034)
Loss on sale of assets— 273 
Amortization of key money(238)(234)
Recovery of doubtful accounts(483)(9)
Other(69)199 
Changes in assets and liabilities:
Trade and other receivables, net(15,735)(1,350)
Accounts receivable from related parties(4,946)244 
Inventories(725)(356)
Prepayments and other assets(223)4,636 
Trade and other payables281 (2,940)
Payables to related parties 2,262 (1,345)
Income tax payable152 (190)
Other liabilities312 (160)
Net cash provided by (used in) operating activities37,648 (26,562)
INVESTING ACTIVITIES
Capital expenditures(4,430)(4,561)
Purchase of intangibles(30)(29)
Proceeds from the sale of assets, net24 34,212 
Net cash (used in) provided by investing activities(4,436)29,622 
FINANCING ACTIVITIES
Proceeds from ordinary shares, net of issuance costs— 137,716 
Repayments of debt(2,525)(2,525)
Repayments of borrowings on revolving credit facility— (84,667)
Repurchase of ordinary shares for tax withholdings— (55)
Principal payments on finance lease obligations(99)(23)
Net cash (used in) provided by financing activities(2,624)50,446 
INCREASE IN CASH AND CASH EQUIVALENTS30,588 53,506 
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, BEGINNING OF THE PERIOD$293,577 $172,860 
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, END OF THE PERIOD$324,165 $226,366 
RECONCILIATION OF CASH, CASH EQUIVALENTS AND RESTRICTED CASH
Cash and cash equivalents$299,802 $200,427 
Restricted cash24,363 25,939 
TOTAL CASH, CASH EQUIVALENTS AND RESTRICTED CASH$324,165 $226,366 
The accompanying Notes form an integral part of the Condensed Consolidated Financial Statements.
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Playa Hotels & Resorts N.V.
Condensed Consolidated Statements of Cash Flows (continued)
($ in thousands)
(unaudited)
Three Months Ended March 31,
20222021
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid for interest$18,221 $18,798 
Cash paid for income taxes, net$32 $197 
SUPPLEMENTAL DISCLOSURES OF NON-CASH ACTIVITIES
Capital expenditures incurred but not yet paid$696 $720 
Intangible assets capitalized but not yet paid$45 $59 
Par value of vested restricted share awards$152 $87 
The accompanying Notes form an integral part of the Condensed Consolidated Financial Statements.
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Playa Hotels & Resorts N.V.
Notes to the Condensed Consolidated Financial Statements
(unaudited)
Note 1. Organization, operations and basis of presentation
Background
Playa Hotels & Resorts N.V. (“Playa” or the “Company”) is a leading owner, operator and developer of all-inclusive resorts in prime beachfront locations in popular vacation destinations. We own and/or manage a portfolio of 22 resorts located in Mexico, the Dominican Republic and Jamaica. Unless otherwise indicated or the context requires otherwise, references in our condensed consolidated financial statements (our “Condensed Consolidated Financial Statements”) to “we,” “our,” “us” and similar expressions refer to Playa and its subsidiaries.
Basis of preparation, presentation and measurement
Our Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information. Certain information and disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. Accordingly, these unaudited interim Condensed Consolidated Financial Statements should be read in conjunction with our Consolidated Financial Statements as of and for the year ended December 31, 2021, included in our Annual Report on Form 10-K, filed with the Securities and Exchange Commission (the “SEC”) on February 24, 2022 (the “Annual Report”).
In our opinion, the unaudited interim Condensed Consolidated Financial Statements have been prepared on the same basis as the annual Consolidated Financial Statements and include all adjustments, consisting of only normal recurring adjustments, necessary for fair presentation.
The results of operations for the three months ended March 31, 2022 are not necessarily indicative of the results of operations to be expected for the full year ending December 31, 2022. All dollar amounts (other than per share amounts) in the following disclosures are in thousands of United States dollars, unless otherwise indicated.
Note 2. Significant accounting policies
Standards adopted
StandardDescriptionDate of AdoptionEffect on the Financial Statements or Other Significant Matters
Accounting Standards Update (“ASU”) No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting

ASU No. 2021-01, Reference Rate Reform (Topic 848): Scope
The amendments in this update provide optional expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met.January 2022The adoption of ASU No. 2020-04 and ASU 2021-01 had no impact on our Condensed Consolidated Financial Statements for the three months ended March 31, 2022, as we have not modified our variable rate debt that is priced using a spread over one-month London Interbank Offered Rate (“LIBOR”).

Additionally, our interest rate swaps mature on March 31, 2023, prior to the anticipated discontinuation of the one-month LIBOR rate on June 30, 2023. We do not expect to modify our interest rate swap contracts prior to their maturity date.
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Note 3. Revenue

The following tables present our revenues disaggregated by geographic segment (refer to discussion of our reportable segments in Note 15) ($ in thousands):
Three Months Ended March 31, 2022
Yucatán
Peninsula
Pacific
Coast
Dominican
Republic
Jamaica
Other
Total
Package revenue$60,566 $25,929 $59,696 $37,918 $— $184,109 
Non-package revenue9,812 3,915 10,013 8,208 508 32,456 
Management fees30 — — — 1,027 1,057 
Cost reimbursements— — — 998 954 1,952 
Total revenue$70,408 $29,844 $69,709 $47,124 $2,489 $219,574 
Three Months Ended March 31, 2021
Yucatán
Peninsula
Pacific
Coast
Dominican
Republic
Jamaica
Other
Total
Package revenue
$28,870 $7,552 $17,463 $10,009 $— $63,894 
Non-package revenue
5,808 1,362 3,432 2,268 125 12,995 
Management fees
— — — — 344 344 
Cost reimbursements
— — — 377 136 513 
Total revenue$34,678 $8,914 $20,895 $12,654 $605 $77,746 

Contract assets and liabilities

We do not have any material contract assets as of March 31, 2022 and December 31, 2021 other than trade and other receivables on our Condensed Consolidated Balance Sheet. Our receivables are primarily the result of contracts with customers, which are reduced by an allowance for doubtful accounts that reflects our estimate of amounts that will not be collected.

We record contract liabilities when cash payments are received or due in advance of guests staying at our resorts, which are presented as advance deposits (see Note 14) within trade and other payables on our Condensed Consolidated Balance Sheet. Our advanced deposits are generally recognized as revenue within one year.
Note 4. Property and equipment
The balance of property and equipment, net is as follows ($ in thousands):
As of March 31,As of December 31,
20222021
Property and equipment, gross
Land, buildings and improvements$1,760,827 $1,759,837 
Fixtures and machinery (1)
84,480 84,264 
Furniture and other fixed assets206,766 205,141 
Construction in progress4,646 3,781 
Total property and equipment, gross2,056,719 2,053,023 
Accumulated depreciation(486,980)(468,449)
Total property and equipment, net$1,569,739 $1,584,574 
________
(1) Includes the gross balance of our financing lease right-of-use assets, which was $6.3 million as of March 31, 2022 and December 31, 2021 (see Note 11).
Depreciation expense for property and equipment was $19.1 million and $20.5 million for the three months ended March 31, 2022 and 2021, respectively.

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Sale of Capri Resort
On March 31, 2021, we entered into an agreement to sell our equity interest in the Capri Resort, which was reported within our Yucatán Peninsula reportable segment, for $55.0 million in cash consideration. Upon entering into the agreement, we classified the resort and related deferred tax liabilities as held for sale and recorded an impairment loss of $24.0 million for the three months ended March 31, 2021.
Sale of Dreams Puerto Aventuras
On February 5, 2021, we completed the sale of the Dreams Puerto Aventuras. Upon closing, we received total cash consideration of $34.3 million, after customary closing costs.
Lessor contracts
We rent certain real estate to third parties for office and retail space within our resorts. Our lessor contracts are considered operating leases and generally have a contractual term of one to three years. The following table presents our rental income for the three months ended March 31, 2022 and 2021 ($ in thousands):
Three Months Ended March 31,
Leases20222021
Operating lease income (1)
$1,226 $606 
________
(1) Our operating lease income, which is recorded within non-package revenue in the Condensed Consolidated Statements of Operations, includes variable lease revenue which is typically calculated as a percentage of our tenant's net sales.
Note 5. Income taxes
We file tax returns for our entities in key jurisdictions including Mexico, Dominican Republic, Jamaica, the United States, and the Netherlands. We are domiciled in the Netherlands and our Dutch subsidiaries are subject to a Dutch general tax rate of 25.8%. Our other operating subsidiaries are subject to tax rates up to 30% in the jurisdictions in which they are domiciled.
We recognized an income tax provision of $1.6 million for the three months ended March 31, 2022, compared to an income tax benefit of $2.0 million for the three months ended March 31, 2021.
All of our outstanding Advanced Pricing Agreements (“APAs”) for our Dominican Republic entities expired as of December 31, 2021. We are currently in the process of renegotiating the terms of our APAs and expect that the terms will be finalized before the end of 2022. This is reflected in our estimated annual effective tax rate calculation.
We had no uncertain tax positions or unrecognized tax benefits as of March 31, 2022. We expect no significant changes in unrecognized tax benefits over the next twelve months.
Note 6. Related party transactions
Relationship with Hyatt and AMResorts
Hyatt Hotels Corporation (“Hyatt”) is considered a related party due to its ownership of our ordinary shares by its affiliated entities. Hyatt also had representation on our Board of Directors until August 18, 2021. We pay Hyatt fees associated with the franchise agreements of our resorts operating under the all-ages Hyatt Ziva and adults-only Hyatt Zilara brands and receive reimbursements for guests that pay for their stay using the World of Hyatt® guest loyalty program.
In November 2021, Hyatt completed its acquisition of Apple Leisure Group (“ALG”), which owns the brand management platform AMResorts in addition to various tour operators and travel agencies. We pay AMResorts and its affiliates, as operators of two of our resorts, management and marketing fees, and sell all-inclusive packages through ALG’s tour operators and travel agencies.
Relationship with Sagicor
Sagicor Financial Corporation Limited and its affiliated entities (collectively “Sagicor”) is considered a related party due to its ownership of our ordinary shares and representation on our Board of Directors. We pay Sagicor for employee insurance coverage at
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one of our Jamaica properties. Sagicor is also a part owner of the Jewel Grande Montego Bay Resort & Spa and compensates us as manager of the property.
Relationship with Davidson Kempner Capital Management L.P.
Davidson Kempner Capital Management L.P. (“DKCM”) is the investment manager of multiple affiliated funds and is considered a related party due to the DKCM funds’ ownership of our ordinary shares acquired in the public offering of our ordinary shares in January 2021. The affiliated funds managed by DKCM are also the lenders to our Property Loan and Additional Credit Facility, which consists of our Term A1, Term A2 and Term A3 loans (see Note 11). We pay DKCM periodic interest payments related to the outstanding debt.
Lease with our Chief Executive Officer
One of our offices is owned by our Chief Executive Officer and we sublease the space at that location from a third party.
Transactions with related parties
Transactions between us and related parties during the three months ended March 31, 2022 and 2021 were as follows ($ in thousands):
Three Months Ended March 31,
Related PartyTransaction20222021
Revenues
ALGPackage revenue$5,874 $— 
Sagicor
Cost reimbursements (1)
$1,103 $430 
Expenses
Hyatt
Franchise fees (2)
$7,413 $3,516 
Sagicor
Insurance premiums (2)
$279 $155 
Chief Executive Officer
Lease expense (3)
$188 $228 
DKCM
Interest expense (4)
$5,405 $5,404 
AMResorts
Management fees (2)
$1,112 $— 
AMResorts
Marketing fees (3)
$1,083 $— 
________
(1)Equivalent amount included as reimbursed costs in the Condensed Consolidated Statements of Operations.
(2)Included in direct expense in the Condensed Consolidated Statements of Operations with the exception of certain immaterial fees associated with the Hyatt franchise agreements, which are included in selling, general, and administrative expense.
(3)Included in selling, general, and administrative expense in the Condensed Consolidated Statements of Operations.
(4)Includes interest expense and amortization of deferred financing costs and discounts.
Note 7. Commitments and contingencies
We are involved in various claims and lawsuits arising in the normal course of business, including proceedings involving tort and other general liability claims, and workers’ compensation and other employee claims. Most occurrences involving liability and claims of negligence are covered by insurance with solvent insurance carriers. We recognize a liability when we believe the loss is probable and reasonably estimable. We currently believe that the ultimate outcome of such lawsuits and proceedings will not, individually or in the aggregate, have a material effect on our Condensed Consolidated Financial Statements.
The Dutch corporate income tax act provides the option of a fiscal unity, which is a consolidated tax regime wherein the profits and losses of group companies can be offset against each other. With the exception of Playa Dominican Resort B.V., Playa Romana B.V., Playa Romana Mar B.V. and Playa Hotels & Resorts N.V., our Dutch companies file as a fiscal unity. Playa Resorts Holding B.V. is the head of our Dutch fiscal unity and is jointly and severally liable for the tax liabilities of the fiscal unity as a whole.
Note 8. Ordinary shares
As of March 31, 2022, our ordinary share capital consisted of 165,778,067 ordinary shares outstanding, which have a par value of €0.10 per share. In addition, 3,926,401 restricted shares and performance share awards and 27,245 restricted share units were
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outstanding under the 2017 Plan (as defined in Note 9). The holders of restricted shares and performance share awards are entitled to vote, but not dispose of, such shares until they vest. The holders of restricted share units are neither entitled to vote nor dispose of such shares until they vest.
Note 9. Share-based compensation
We adopted our 2017 Omnibus Incentive Plan (the “2017 Plan”) to attract and retain independent directors, executive officers and other key employees and service providers. As of March 31, 2022, there were 3,498,568 shares available for future grants under the 2017 Plan.
Restricted share awards consist of restricted shares and restricted share units that are granted to eligible employees, executives, and board members and consist of ordinary shares (or the right to receive ordinary shares).
A summary of our restricted share awards from January 1, 2022 to March 31, 2022 is as follows:
Number of SharesWeighted-Average Grant Date Fair Value
Unvested balance at January 1, 20223,006,791 $6.50 
Granted1,034,850 8.20 
Vested(1,323,366)6.31 
Forfeited(93,752)7.73 
Unvested balance at March 31, 20222,624,523 $7.22 
Performance share awards consist of ordinary shares that may become earned and vested at the end of a three-year performance period based on the achievement of performance targets adopted by our Compensation Committee. Our performance shares have market conditions where 50% of the performance share awards will vest based on the total shareholder return (“TSR”) of our ordinary shares relative to those of our peer group and 50% will vest based on the compound annual growth rate of the price of our ordinary shares. The peer shareholder return component may vest between 0% and 150% of target, with the award capped at 100% of target should Playa's TSR be negative. The growth rate component may vest up to 100% of target.
The table below summarizes the key inputs used in the Monte-Carlo simulation to determine the grant date fair value of our performance share awards ($ in thousands):
Performance Award Grant DatePercentage of Total AwardGrant Date Fair Value by Component
Volatility (1)
Interest
Rate (2)
Dividend Yield
January 4, 2022
Peer Shareholder Return50 %$1,689 67.79 %1.01 %— %
Growth Rate50 %$1,346 67.79 %1.01 %— %
________
(1) Expected volatility was determined based on the historical share prices of the Company.
(2) The risk-free rate was based on U.S. Treasury zero coupon issues with a remaining term equal to the remaining term of the measurement period.
A summary of our performance share awards from January 1, 2022 to March 31, 2022 is as follows:
Number of SharesWeighted-Average Grant Date Fair Value
Unvested balance at January 1, 20221,027,519 $5.18 
Granted374,998 8.10 
Vested(16,421)4.34 
Forfeited(56,973)4.34 
Unvested balance at March 31, 20221,329,123 $6.05 
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Note 10. Earnings per share
Basic and diluted earnings or loss per share (“EPS”) are as follows ($ in thousands, except share data):
Three Months Ended March 31,
20222021
Numerator
Net income (loss) $42,747 $(69,745)
Denominator
Denominator for basic EPS - weighted-average number of shares outstanding165,743,382 160,827,261 
Effect of dilutive securities
Unvested performance share awards401,903 — 
Unvested restricted share awards742,844 — 
Denominator for diluted EPS - adjusted weighted-average number of shares outstanding166,888,129 160,827,261 
EPS - Basic$0.26 $(0.43)
EPS - Diluted$0.26 $(0.43)

For the three months ended March 31, 2022 and 2021, unvested performance share awards in the amounts of 187,500 and 1,027,519 shares, respectively, were not included in the computation of diluted EPS as their effect would have been anti-dilutive. The performance targets of our unvested performance share awards were partially achieved as of March 31, 2022 and 2021.

We had no anti-dilutive unvested restricted share awards for the three months ended March 31, 2022. For the three months ended March 31, 2021, unvested restricted share awards of 3,432,944 were not included in the computation of diluted EPS as their effect would have been anti-dilutive.

For the three months ended March 31, 2021, outstanding earnout warrants to acquire a total of 2,987,770 ordinary shares were not included in the computation of diluted EPS after assumed conversions because the warrants were not exercisable during the reporting period. On March 12, 2022, all of our outstanding warrants expired and had no impact on diluted EPS for the three months ended March 31, 2022.
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Note 11. Debt
Our debt consists of the following ($ in thousands):
Outstanding Balance as of
Interest RateMaturity DateMarch 31, 2022December 31, 2021
Senior Secured Credit Facilities
Revolving Credit Facility (1)
LIBOR + 3.00%
LIBOR + 4.00%
April 27, 2022 ($17.0 million)
January 27, 2024 ($68.0 million)
$— $— 
Term Loan (2)
LIBOR + 2.75%
April 27, 2024939,343 941,868 
Term A1 Loan11.4777%April 27, 202435,000 35,000 
Term A2 Loan11.4777%April 27, 202431,000 31,000 
Term A3 Loan (3)
LIBOR + 3.00%
April 27, 202427,319 27,319 
Total Senior Secured Credit Facilities (at stated value)1,032,662 1,035,187 
Unamortized discount(1,029)(1,153)
Unamortized debt issuance costs(3,761)(4,207)
Total Senior Secured Credit Facilities, net$1,027,872 $1,029,827 
Property Loan
Property Loan (at stated value)9.25%July 1, 2025$110,000 $110,000 
Unamortized discount(2,894)(3,107)
Unamortized debt issuance costs(3,223)(3,459)
Total Property Loan, net$103,883 $103,434 
Financing lease obligations$5,959 $6,058 
Total debt, net$1,137,714 $1,139,319 
________
(1)Undrawn balances bear interest between 0.25% to 0.5% depending on certain leverage ratios. We had an available balance of $85.0 million as of March 31, 2022 and December 31, 2021.
(2)One-month LIBOR is subject to a 1.0% floor. The effective interest rate was 3.75% as of both March 31, 2022 and December 31, 2021. Our two interest rate swaps fix LIBOR at 2.85% on $800.0 million of our Term Loan (see Note 12).
(3)One-month LIBOR is subject to a 1.0% floor. The effective interest rate was 4.00% as of both March 31, 2022 and December 31, 2021.

Financial maintenance covenants
We were in compliance with all applicable covenants as of March 31, 2022. A summary of our applicable covenants and restrictions is as follows:
DebtCovenant Terms
Senior Secured Credit Facility
We maintained the minimum liquidity balance of $70.0 million through March 31, 2022. Subsequent to March 31, 2022, we will be subject to the following total net leverage ratio requirements if we have more than 35% drawn on the Revolving Credit Facility:

▪6.50x for the period ended March 31, 2022;
▪6.00x for the period ended June 30, 2022; and
▪4.75x for periods thereafter.
Term A1 LoanSame terms as the Senior Secured Credit Facility
Term A2 LoanNo applicable debt covenants.
Term A3 LoanNo applicable debt covenants.
Property Loan
No applicable debt covenants other than the requirement to maintain a cash reserve until the Properties achieve a debt service coverage ratio of 1.50x for two consecutive quarters.
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Note 12. Derivative financial instruments
Our two interest rate swaps mitigate the interest rate risk inherent to our floating rate debt, including the Revolving Credit Facility and Term Loan. The interest rate swaps are not for trading purposes and have fixed notional values of $200.0 million and $600.0 million. The fixed rate paid by us is 2.85% and the variable rate received resets monthly to the one-month LIBOR rate, which results in us fixing LIBOR at 2.85% on $800.0 million of our Term Loan. The interest rate swaps mature on March 31, 2023.

Our interest rate swaps are designated as cash flow hedges, but were deemed ineffective due to the decrease in interest rates. All changes in fair value are recognized through interest expense in the Condensed Consolidated Statements of Operations.

The following tables present the effect of our interest rate swaps, net of tax, in the Condensed Consolidated Statements of Comprehensive Income (Loss) and Condensed Consolidated Statements of Operations for the three months ended March 31, 2022 and 2021 ($ in thousands):
20222021
AOCI from our cash flow hedges as of January 1$14,632 $26,369 
Change in fair value— — 
Reclassification from AOCI to interest expense(2,894)(2,894)
OCI related to our cash flow hedges for the three months ended March 31(2,894)(2,894)
AOCI from our cash flow hedges as of March 31 (1)
$11,738 $23,475 
________
(1) As of March 31, 2022, the total amount expected to be reclassified from AOCI to interest expense during the next twelve months is $11.7 million, which represents prior losses recognized in AOCI when our interest rate swaps were deemed effective hedges.
Derivative Liabilities for Ineffective HedgesFinancial Statement ClassificationThree Months Ended March 31,
20222021
Interest rate swaps (1)
Interest expense$(5,715)$2,811 
________
(1) Includes the change in fair value of our interest rate swaps and the cash interest paid for the monthly settlements of the derivative.
The following tables present the effect of our interest rate swaps in the Condensed Consolidated Balance Sheet as of March 31, 2022 and December 31, 2021 ($ in thousands):
Derivative Liabilities for Ineffective HedgesFinancial Statement ClassificationAs of March 31,As of December 31,
20222021
Interest rate swapsDerivative financial instruments$8,515 $22,543 

Derivative financial instruments expose us to credit risk in the event of non-performance by the counterparty under the terms of the interest rate swaps. We incorporate these counterparty credit risks in our fair value measurements (see Note 13) and believe we minimize this credit risk by transacting with major creditworthy financial institutions.
Note 13. Fair value of financial instruments
The objective of a fair value measurement is to estimate the price at which an orderly transaction to sell the asset or to transfer the liability would take place between market participants at the measurement date under current market conditions. U.S. GAAP establishes a hierarchical disclosure framework, which prioritizes and ranks the level of observability of inputs used in measuring fair value as follows:
•Level 1: Unadjusted quoted prices in active markets for identical assets or liabilities.
•Level 2: Unadjusted quoted prices for similar assets or liabilities in active markets, or unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active, or inputs other than quoted prices that are observable for the asset or liability.
•Level 3: Inputs are unobservable and reflect our judgments about assumptions that market participants would use in pricing an asset or liability.
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We believe the carrying value of our financial instruments, excluding our debt, approximate their fair values as of March 31, 2022 and December 31, 2021. We did not have any Level 3 instruments during any of the periods presented in our Condensed Consolidated Financial Statements.
The following tables present our fair value hierarchy for our financial liabilities measured at fair value on a recurring basis as of March 31, 2022 and December 31, 2021 ($ in thousands):
March 31, 2022Level 1Level 2Level 3
Fair value measurements on a recurring basis
Interest rate swap$8,515 $— $8,515 $— 
December 31, 2021Level 1Level 2Level 3
Fair value measurements on a recurring basis
Interest rate swap$22,543 $— $22,543 $— 
The following tables present our fair value hierarchy for our financial liabilities not measured at fair value as of March 31, 2022 and December 31, 2021 ($ in thousands):
Carrying Value