RLJ Lodging Trust [RLJ] Filings

10-Q 1 rlj-20240630.htm 10-Q rlj-20240630

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 the quarterly period ended June 30, 2024


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

For the transition period from to

Commission File Number 001-35169

RLJ LODGING TRUST

(Exact Name of Registrant as Specified in Its Charter)


Maryland						27-4706509
(State or Other Jurisdiction of Incorporation or Organization)						(I.R.S. Employer Identification No.)


7373 Wisconsin Avenue, Suite 1500
Bethesda,	Maryland	20814
(Address of Principal Executive Offices)		(Zip Code)

(301) 280-7777

(Registrant’s Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Exchange Act:

Title of Each Class

Trading Symbol

Name of Exchange on Which Registered

Common Shares of beneficial interest, par value $0.01 per share

RLJ

New York Stock Exchange

$1.95 Series A Cumulative Convertible Preferred Shares, par value $0.01 per share

RLJ-A

New York Stock Exchange

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 for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 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.

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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 Exchange Act). ☐ Yes ☒ No

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

As of July 26, 2024, 155,024,153 common shares of beneficial interest of the Registrant, $0.01 par value per share, were outstanding.

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		Page

PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements

	Consolidated Financial Statements (unaudited)
	Balance Sheets as of J une 3 0 , 2024 and December 31, 2023	1
	Statements of Operations and Comprehensive Income for the three and six months ended J une 3 0 , 2024 and 2023	2
	Statements of Changes in Equity for the three and six months ended June 3 0 , 2024 and 2023	4
	Statements of Cash Flows for the six months ended June 3 0 , 2024 and 2023	8
	Notes to the Consolidated Financial Statements	9

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	23
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	36
Item 4.	Controls and Procedures	36

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	37
Item 1A.	Risk Factors	37
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	37
Item 3.	Defaults Upon Senior Securities	37
Item 4.	Mine Safety Disclosures	37
Item 5.	Other Information	37
Item 6.	Exhibits	38

Signatures		39

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PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

RLJ Lodging Trust

Consolidated Balance Sheets

(Amounts in thousands, except share and per share data)

(unaudited)


	June 30, 2024		December 31, 2023
Assets
Investment in hotel properties, net	$	4,274,669	$	4,136,216
Investment in unconsolidated joint ventures	7,386		7,398
Cash and cash equivalents	371,133		516,675
Restricted cash reserves	36,081		38,652
Hotel and other receivables, net of allowance of $369 and $265, respectively	30,916		26,163
Lease right-of-use assets	130,875		136,140


Prepaid expense and other assets	66,967		58,051

Total assets	$	4,918,027	$	4,919,295
Liabilities and Equity
Debt, net	$	2,222,642	$	2,220,778
Accounts payable and other liabilities	149,682		147,819

Advance deposits and deferred revenue	33,475		32,281
Lease liabilities	119,902		122,588
Accrued interest	21,934		22,539
Distributions payable	22,621		22,500
Total liabilities	2,570,256		2,568,505
Commitments and Contingencies (Note 11)
Equity
Shareholders’ equity:
Preferred shares of beneficial interest, $0.01 par value, 50,000,000 shares authorized
Series A Cumulative Convertible Preferred Shares, $0.01 par value, 12,950,000 shares authorized; 12,879,475 shares issued and outstanding, liquidation value of $328,266, at June 30, 2024 and December 31, 2023	366,936		366,936
Common shares of beneficial interest, $0.01 par value, 450,000,000 shares authorized; 155,240,677 and 155,297,829 shares issued and outstanding at June 30, 2024 and December 31, 2023, respectively	1,552		1,553
Additional paid-in capital	3,000,394		3,000,894
Distributions in excess of net earnings	(1,057,061)		(1,055,183)
Accumulated other comprehensive income	22,171		22,662
Total shareholders’ equity	2,333,992		2,336,862
Noncontrolling interests:
Noncontrolling interest in the Operating Partnership	6,318		6,294
Noncontrolling interest in consolidated joint ventures	7,461		7,634
Total noncontrolling interests	13,779		13,928

Total equity	2,347,771		2,350,790
Total liabilities and equity	$	4,918,027	$	4,919,295

The accompanying notes are an integral part of these consolidated financial statements.

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RLJ Lodging Trust

Consolidated Statements of Operations and Comprehensive Income

(Amounts in thousands, except share and per share data)

(unaudited)


	For the three months ended June 30,				For the six months ended June 30,
	2024		2023		2024		2023
Revenues
Operating revenues
Room revenue	$	303,652	$	295,496	$	570,282	$	556,328
Food and beverage revenue	40,843		38,132		76,532		71,420
Other revenue	24,802		23,332		46,893		43,715
Total revenues	369,297		356,960		693,707		671,463
Expenses
Operating expenses
Room expense	73,941		70,333		143,327		136,384
Food and beverage expense	30,304		28,037		58,931		54,174
Management and franchise fee expense	29,789		29,277		55,444		55,459
Other operating expenses	90,792		84,207		180,601		166,831
Total property operating expenses	224,826		211,854		438,303		412,848
Depreciation and amortization	44,474		44,925		89,153		89,921

Property tax, insurance and other	28,753		24,684		56,587		49,332
General and administrative	13,940		14,627		29,045		28,283
Transaction costs	76		4		90		24
Total operating expenses	312,069		296,094		613,178		580,408
Other income, net	687		736		3,878		1,585
Interest income	4,118		5,011		8,905		8,675
Interest expense	(28,049)		(24,543)		(54,507)		(48,673)
Gain (loss) on sale of hotel properties, net	3,546		(44)		3,546		(44)
Loss on extinguishment of indebtedness, net	—		(169)		—		(169)
Income before equity in income from unconsolidated joint ventures	37,530		41,857		42,351		52,429
Equity in income from unconsolidated joint ventures	154		220		388		501
Income before income tax expense	37,684		42,077		42,739		52,930
Income tax expense	(393)		(357)		(702)		(696)
Net income	37,291		41,720		42,037		52,234
Net (income) loss attributable to noncontrolling interests:
Noncontrolling interest in the Operating Partnership	(169)		(171)		(167)		(188)
Noncontrolling interest in consolidated joint ventures	(16)		(154)		173		(6)


Net income attributable to RLJ	37,106		41,395		42,043		52,040
Preferred dividends	(6,279)		(6,279)		(12,557)		(12,557)
Net income attributable to common shareholders	$	30,827	$	35,116	$	29,486	$	39,483

Basic per common share data:
Net income per share attributable to common shareholders	$	0.20	$	0.22	$	0.19	$	0.25
Weighted-average number of common shares	153,641,065		156,424,444		153,305,640		157,945,406

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Diluted per common share data:
Net income per share attributable to common shareholders	$	0.20	$	0.22	$	0.19	$	0.25
Weighted-average number of common shares	154,105,871		156,741,187		154,151,135		158,381,380



Comprehensive income:
Net income	$	37,291	$	41,720	$	42,037	$	52,234
Unrealized (loss) gain on interest rate derivatives	(2,773)		7,558		(491)		1,142

Comprehensive income	34,518		49,278		41,546		53,376
Comprehensive (income) loss attributable to noncontrolling interests:
Noncontrolling interest in the Operating Partnership	(169)		(171)		(167)		(188)
Noncontrolling interest in consolidated joint ventures	(16)		(154)		173		(6)


Comprehensive income attributable to RLJ	$	34,333	$	48,953	$	41,552	$	53,182

The accompanying notes are an integral part of these consolidated financial statements.

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RLJ Lodging Trust

Consolidated Statements of Changes in Equity

(Amounts in thousands, except share data)

(unaudited)


	Shareholders’ Equity												Noncontrolling Interest
	Preferred Stock			Common Stock
	Shares	Amount		Shares	Par Value		Additional Paid-in Capital		Distributions in excess of net earnings		Accumulated Other Comprehensive Income		Operating Partnership		Consolidated Joint Ventures		Total Equity
Balance at December 31, 2023	12,879,475	$	366,936	155,297,829	$	1,553	$	3,000,894	$	(1,055,183)	$	22,662	$	6,294	$	7,634	$	2,350,790
Net income (loss)	—	—		—	—		—		42,043		—		167		(173)		42,037
Unrealized loss on interest rate derivatives	—	—		—	—		—		—		(491)		—		—		(491)









Issuance of restricted stock	—	—		1,178,779	11		(11)		—		—		—		—		—
Amortization of share-based compensation	—	—		—	—		12,705		—		—		—		—		12,705

Shares acquired to satisfy minimum required federal and state tax withholding on vesting restricted stock	—	—		(807,917)	(8)		(9,006)		—		—		—		—		(9,014)
Shares acquired as part of a share repurchase program	—	—		(407,857)	(4)		(4,188)		—		—		—		—		(4,192)
Forfeiture of restricted stock	—	—		(20,157)	—		—		—		—		—		—		—
Distributions on preferred shares	—	—		—	—		—		(12,557)		—		—		—		(12,557)
Distributions on common shares and units	—	—		—	—		—		(31,364)		—		(143)		—		(31,507)


Balance at June 30, 2024	12,879,475	$	366,936	155,240,677	$	1,552	$	3,000,394	$	(1,057,061)	$	22,171	$	6,318	$	7,461	$	2,347,771

The accompanying notes are an integral part of these consolidated financial statements.

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RLJ Lodging Trust

Consolidated Statements of Changes in Equity

(Amounts in thousands, except share data)

(unaudited)


	Shareholders’ Equity												Noncontrolling Interest
	Preferred Stock			Common Stock
	Shares	Amount		Shares	Par Value		Additional Paid-in Capital		Distributions in excess of net earnings		Accumulated Other Comprehensive Income		Operating Partnership		Consolidated Joint Ventures		Total Equity
Balance at March 31, 2024	12,879,475	$	366,936	155,819,434	$	1,558	$	3,002,588	$	(1,072,125)	$	24,944	$	6,220	$	7,445	$	2,337,566
Net income	—	—		—	—		—		37,106		—		169		16		37,291
Unrealized loss on interest rate derivatives	—	—		—	—		—		—		(2,773)		—		—		(2,773)







Issuance of restricted stock	—	—		205,414	2		(2)		—		—		—		—		—
Amortization of share-based compensation	—	—		—	—		5,724		—		—		—		—		5,724

Shares acquired to satisfy minimum required federal and state tax withholding on vesting restricted stock	—	—		(462,047)	(5)		(4,978)		—		—		—		—		(4,983)
Shares acquired as part of a share repurchase program	—	—		(302,346)	(3)		(2,938)		—		—		—		—		(2,941)
Forfeiture of restricted stock	—	—		(19,778)	—		—		—		—		—		—		—


Distributions on preferred shares	—	—		—	—		—		(6,279)		—		—		—		(6,279)
Distributions on common shares and units	—	—		—	—		—		(15,763)		—		(71)		—		(15,834)


Balance at June 30, 2024	12,879,475	$	366,936	155,240,677	$	1,552	$	3,000,394	$	(1,057,061)	$	22,171	$	6,318	$	7,461	$	2,347,771

The accompanying notes are an integral part of these consolidated financial statements.

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RLJ Lodging Trust

Consolidated Statements of Changes in Equity

(Amounts in thousands, except share data)

(unaudited)


	Shareholders’ Equity												Noncontrolling Interest
	Preferred Stock			Common Stock
	Shares	Amount		Shares	Par Value		Additional Paid-in Capital		Distributions in excess of net earnings		Accumulated Other Comprehensive Income		Operating Partnership		Consolidated Joint Ventures		Total Equity
Balance at December 31, 2022	12,879,475	$	366,936	162,003,533	$	1,620	$	3,054,958	$	(1,049,441)	$	40,591	$	6,313	$	7,669	$	2,428,646
Net income	—	—		—	—		—		52,040		—		188		6		52,234
Unrealized gain on interest rate derivatives	—	—		—	—		—		—		1,142		—		—		1,142











Issuance of restricted stock	—	—		1,190,961	12		(12)		—		—		—		—		—
Amortization of share-based compensation	—	—		—	—		12,728		—		—		—		—		12,728

Shares acquired to satisfy minimum required federal and state tax withholding on vesting restricted stock	—	—		(407,205)	(4)		(4,394)		—		—		—		—		(4,398)
Shares acquired as part of a share repurchase program	—	—		(5,082,968)	(51)		(51,930)		—		—		—		—		(51,981)
Forfeiture of restricted stock	—	—		(18,130)	—		—		—		—		—		—		—
Distributions on preferred shares	—	—		—	—		—		(12,557)		—		—		—		(12,557)
Distributions on common shares and units	—	—		—	—		—		(25,608)		—		(121)		—		(25,729)


Balance at June 30, 2023	12,879,475	$	366,936	157,686,191	$	1,577	$	3,011,350	$	(1,035,566)	$	41,733	$	6,380	$	7,675	$	2,400,085

The accompanying notes are an integral part of these consolidated financial statements.

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RLJ Lodging Trust

Consolidated Statements of Changes in Equity

(Amounts in thousands, except share data)

(unaudited)


	Shareholders’ Equity												Noncontrolling Interest
	Preferred Stock			Common Stock
	Shares	Amount		Shares	Par Value		Additional Paid-in Capital		Distributions in excess of net earnings		Accumulated Other Comprehensive Income		Operating Partnership		Consolidated Joint Ventures		Total Equity
Balance at March 31, 2023	12,879,475	$	366,936	160,077,784	$	1,601	$	3,034,682	$	(1,057,939)	$	34,175	$	6,264	$	7,521	$	2,393,240
Net income	—	—		—	—		—		41,395		—		171		154		41,720
Unrealized gain on interest rate derivatives	—	—		—	—		—		—		7,558		—		—		7,558









Issuance of restricted stock	—	—		550,554	6		(6)		—		—		—		—		—
Amortization of share-based compensation	—	—		—	—		6,597		—		—		—		—		6,597

Shares acquired to satisfy minimum required federal and state tax withholding on vesting restricted stock	—	—		(244,456)	(3)		(2,506)		—		—		—		—		(2,509)
Shares acquired as part of a share repurchase program	—	—		(2,681,115)	(27)		(27,417)		—		—		—		—		(27,444)
Forfeiture of restricted stock	—	—		(16,576)	—		—		—		—		—		—		—
Distributions on preferred shares	—	—		—	—		—		(6,279)		—		—		—		(6,279)
Distributions on common shares and units	—	—		—	—		—		(12,743)		—		(55)		—		(12,798)

Balance at June 30, 2023	12,879,475	$	366,936	157,686,191	$	1,577	$	3,011,350	$	(1,035,566)	$	41,733	$	6,380	$	7,675	$	2,400,085

The accompanying notes are an integral part of these consolidated financial statements.

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RLJ Lodging Trust

Consolidated Statements of Cash Flows

(Amounts in thousands)

(unaudited)


	For the six months ended June 30,
	2024		2023
Cash flows from operating activities
Net income	$	42,037	$	52,234
Adjustments to reconcile net income to cash flow provided by operating activities:
(Gain) loss on sale of hotel properties, net	(3,546)		44
Loss on extinguishment of indebtedness, net	—		169

Depreciation and amortization	89,153		89,921
Amortization of deferred financing costs	3,116		2,965
Other amortization	2,882		2,172


Equity in income from unconsolidated joint ventures	(388)		(501)
Distributions of income from unconsolidated joint ventures	400		—



Amortization of share-based compensation	11,708		11,781

Changes in assets and liabilities:
Hotel and other receivables, net	(4,771)		(3,220)
Prepaid expense and other assets	(11,794)		1,080
Accounts payable and other liabilities	4,972		(22,163)
Advance deposits and deferred revenue	1,130		1,273
Accrued interest	(605)		1,360
Net cash flow provided by operating activities	134,294		137,115
Cash flows from investing activities
Acquisitions, net	(158,345)		—
Proceeds from sales of hotel properties, net	7,679		(44)
Improvements and additions to hotel properties and other assets	(72,372)		(65,771)
Purchase deposit	(2,000)		—





Net cash flow used in investing activities	(225,038)		(65,815)
Cash flows from financing activities
Borrowings under Revolver	200,000		—


Borrowings on Term Loans	—		320,000



Repayments of Term Loans	—		(318,662)
Repayment of mortgage loan	(200,000)		—
Repurchase of common shares under share repurchase programs	(4,192)		(51,981)
Repurchase of common shares to satisfy employee tax withholding requirements	(9,014)		(4,398)
Distributions on preferred shares	(12,557)		(12,557)
Distributions on common shares	(31,244)		(20,962)
Distributions on Operating Partnership units	(142)		(95)

Payments of deferred financing costs	(220)		(7,699)




Net cash flow used in financing activities	(57,369)		(96,354)
Net change in cash, cash equivalents, and restricted cash reserves	(148,113)		(25,054)
Cash, cash equivalents, and restricted cash reserves, beginning of year	555,327		536,386
Cash, cash equivalents, and restricted cash reserves, end of period	$	407,214	$	511,332

The accompanying notes are an integral part of these consolidated financial statements.

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RLJ Lodging Trust

Notes to the Consolidated Financial Statements

(unaudited)

1. General

Organization

RLJ Lodging Trust (the "Company") was formed as a Maryland real estate investment trust ("REIT") on January 31, 2011. The Company is a self-advised and self-administered REIT that owns primarily premium-branded, rooms-oriented, high-margin, focused-service and compact full-service hotels located within heart of demand locations. The Company elected to be taxed as a REIT, for U.S. federal income tax purposes, commencing with its taxable year ended December 31, 2011.

Substantially all of the Company’s assets and liabilities are held by, and all of its operations are conducted through, RLJ Lodging Trust, L.P. (the "Operating Partnership"). The Company is the sole general partner of the Operating Partnership. As of June 30, 2024, there were 156,012,508 units of limited partnership interest in the Operating Partnership ("OP units") outstanding and the Company owned, through a combination of direct and indirect interests, 99.5% of the outstanding OP units.

As of June 30, 2024, the Company owned 97 hotel properties with approximately 21,500 rooms, located in 23 states and the District of Columbia. The Company, through wholly-owned subsidiaries, owned a 100% interest in 95 of its hotel properties, a 95% controlling interest in one hotel property, and a 50% non-controlling interest in an entity owning one hotel property. The Company consolidates its real estate interests in the 96 hotel properties in which it holds a controlling interest, and the Company records the real estate interest in the one hotel property in which it holds an indirect 50% non-controlling interest using the equity method of accounting. The Company leases 96 of the 97 hotel properties to its taxable REIT subsidiaries ("TRSs"), of which the Company owns a controlling financial interest.

2. Summary of Significant Accounting Policies

The Company's Annual Report on Form 10-K for the year ended December 31, 2023, filed with the Securities and Exchange Commission ("SEC") on February 27, 2024 (the "Annual Report"), contains a discussion of the Company's significant accounting policies. Other than noted below, there have been no significant changes to the Company's significant accounting policies since December 31, 2023.

Basis of Presentation and Principles of Consolidation

The unaudited consolidated financial statements and related notes have been prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America ("GAAP") and in conformity with the rules and regulations of the SEC applicable to financial information. The unaudited financial statements include all adjustments of a normal recurring nature that are necessary, in the opinion of management, to fairly state the consolidated balance sheets, statements of operations and comprehensive income, statements of changes in equity and statements of cash flows.

The unaudited consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto as of and for the year ended December 31, 2023, included in the Annual Report.

The consolidated financial statements include the accounts of the Company, the Operating Partnership and its wholly-owned subsidiaries, and joint ventures in which the Company has a majority voting interest and control. For the controlled subsidiaries that are not wholly-owned, the third-party ownership interest represents a noncontrolling interest, which is presented separately in the consolidated financial statements. The Company also records the real estate interest in one hotel property in which it holds a 50% non-controlling interest using the equity method of accounting. All intercompany balances and transactions have been eliminated in consolidation.

Reclassifications

Certain prior year amounts in these financial statements have been reclassified to conform to the current year presentation with no impact to net income and comprehensive income, shareholders’ equity or cash flows.

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Use of Estimates

The preparation of the Company’s financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of certain assets and liabilities and the amounts of contingent assets and liabilities at the balance sheet date and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Recently Issued Accounting Pronouncements and Disclosure Rules

In November 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2023-07, Segment Reporting - Improvements to Reportable Segment Disclosures, which is intended to improve reportable segment disclosures. The ASU expands public entities’ segment disclosures by requiring disclosure of significant segment expenses that are regularly provided to the chief operating decision maker and included within each reported measure of segment profit or loss. It also requires disclosure of the amount and description of the composition of other segment items, as well as interim disclosures of a reportable segment’s profit or loss and assets. The ASU also applies to entities with a single reportable segment. The new standard is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating the impact of this guidance on its consolidated financial statements and related disclosures.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which includes amendments that further enhance income tax disclosures, primarily through standardization and disaggregation of rate reconciliation categories and income taxes paid by jurisdiction. The amendments are effective for the Company beginning January 1, 2025, with early adoption permitted, and should be applied either prospectively or retrospectively. The Company is currently evaluating this ASU to determine its impact on the Company’s consolidated financial statements and related disclosures.

In March 2024, the SEC adopted the final rule under SEC Release No. 33-11275, The Enhancement and Standardization of Climate-Related Disclosures for Investors. In April 2024, the SEC stayed the final climate rules pending the completion of judicial review of an Eighth Circuit challenge seeking to vacate the rules. This rule would require registrants to disclose certain climate-related information in registration statements and annual reports. The disclosure requirements would apply to the Company's fiscal year beginning January 1, 2025. The Company is currently evaluating the final rule to determine its impact on the Company's disclosures.

3. Investment in Hotel Properties

Investment in hotel properties consisted of the following (in thousands):


	June 30, 2024		December 31, 2023
Land and improvements	$	1,129,388	$	998,417
Buildings and improvements	4,177,665		4,117,210
Furniture, fixtures and equipment	829,382		798,410
	6,136,435		5,914,037
Accumulated depreciation	(1,861,766)		(1,777,821)
Investment in hotel properties, net	$	4,274,669	$	4,136,216

For the three and six months ended June 30, 2024, the Company recognized depreciation expense related to its investment in hotel properties of approximately $44.4 million and $89.1 million, respectively. For the three and six months ended June 30, 2023, the Company recognized depreciation expense related to its investment in hotel properties of approximately $44.9 million and $89.9 million, respectively.

4. Acquisitions

On January 29, 2024, the Company acquired the fee simple interest in its Wyndham Boston Beacon Hill hotel property in Boston, Massachusetts, which was previously owned via a leasehold interest that was subject to a ground lease, for a purchase price of approximately $125.0 million. The acquisition was accounted for as an asset acquisition, whereby approximately $0.2 million of transaction costs were capitalized as part of the cost of the acquisition. The existing right-of-use asset of $1.3 million, lease liability of $0.1 million and $125.2 million cost of the acquisition were recorded as land in the accompanying consolidated balance sheet.

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Also during the six months ended June 30, 2024, the Company acquired a 100% interest in the following property:

Property

Location

Acquisition Date

Management Company

Rooms

Purchase Price (in thousands)

Hotel Teatro

Denver, CO

June 13, 2024

Sage Hospitality

110

35,500

The acquisition of Hotel Teatro was accounted for as an asset acquisition, whereby approximately $0.6 million of transaction costs were capitalized as part of the cost of the acquisition. The allocation of the costs for the property acquired was as follows (in thousands):


	June 30, 2024

Land and improvements	$	3,409
Buildings and improvements	29,731
Furniture, fixtures and equipment	2,976


Total purchase price	$	36,116

The value of the asset acquired was primarily based on a sales comparison approach (for land) and a depreciated replacement cost approach (for building and improvements and furniture, fixtures and equipment). The sales comparison approach used inputs of recent land sales in the hotel market. The depreciated replacement cost approach used inputs of both direct and indirect replacement costs using a nationally recognized authority on replacement cost information as well as the age, square footage and number of rooms of the asset.

5. Sale of Hotel Property

On May 21, 2024, the Company sold the 78-room Residence Inn Merrillville hotel property in Merrillville, Indiana

for a sales price of approximately $8.1 million. The Company recorded a net gain of $3.5 million for the three and six months ended June 30, 2024 in connection with the sale of this hotel property.

6. Revenue

The Company recognized revenue from the following geographic markets (in thousands):


	For the three months ended June 30, 2024								For the three months ended June 30, 2023
	Room Revenue		Food and Beverage Revenue		Other Revenue		Total Revenue		Room Revenue		Food and Beverage Revenue		Other Revenue		Total Revenue
Southern California	$	35,839	$	5,022	$	4,013	$	44,874	$	32,569	$	3,878	$	3,626	$	40,073
Northern California	35,062		3,417		2,015		40,494		35,447		3,561		2,030		41,038
South Florida	27,288		5,410		2,864		35,562		27,515		5,484		2,410		35,409
New York City	19,004		3,089		935		23,028		17,600		2,834		908		21,342
Chicago	16,858		2,619		1,092		20,569		17,253		2,730		918		20,901
Louisville	14,133		5,063		995		20,191		12,941		4,137		1,171		18,249
Washington, DC	18,158		416		791		19,365		17,923		514		708		19,145
Boston	15,749		1,250		423		17,422		14,355		1,169		424		15,948
Charleston	12,240		3,196		962		16,398		11,173		2,256		1,238		14,667
Houston	12,244		815		1,326		14,385		12,300		710		1,180		14,190





Other	97,077		10,546		9,386		117,009		96,420		10,859		8,719		115,998
Total	$	303,652	$	40,843	$	24,802	$	369,297	$	295,496	$	38,132	$	23,332	$	356,960

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	For the six months ended June 30, 2024								For the six months ended June 30, 2023
	Room Revenue		Food and Beverage Revenue		Other Revenue		Total Revenue		Room Revenue		Food and Beverage Revenue	Other Revenue	Total Revenue
South Florida	$	67,638	$	11,269	$	5,988	$	84,895	$	66,055	$

RLJ Lodging Trust [RLJ] Filings

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