DiamondRock Hospitality CoDRH
DiamondRock Hospitality Co Debt Disclosure
Debt
The following table sets forth information regarding the Company’s debt (dollars in thousands):
| Principal Balance as of December 31, | ||||||||||||||||||||||||||
| Loan | Interest Rate as of December 31, 2025 | Maturity Date | 2025 | 2024 | ||||||||||||||||||||||
| Worthington Renaissance Fort Worth Hotel mortgage loan | 3.66% | May 2025 | — | 71,766 | ||||||||||||||||||||||
| Hotel Clio mortgage loan | 4.33% | July 2025 | — | 54,657 | ||||||||||||||||||||||
| Westin Boston Seaport District mortgage loan | 4.36% | November 2025 | — | 169,385 | ||||||||||||||||||||||
| Unsecured term loan | SOFR + 1.35% | January 2026 (1) | — | 300,000 | ||||||||||||||||||||||
| Unsecured term loan | SOFR + 1.35% (2) | January 2028 (3) | 500,000 | 500,000 | ||||||||||||||||||||||
| Unsecured term loan | SOFR + 1.35% (4) | January 2029 (3) | 300,000 | — | ||||||||||||||||||||||
| Unsecured term loan | SOFR + 1.35% (4) | January 2030 | 300,000 | — | ||||||||||||||||||||||
| Senior unsecured credit facility | SOFR + 1.40% | January 2030 (3) | — | — | ||||||||||||||||||||||
| Total debt | 1,100,000 | 1,095,808 | ||||||||||||||||||||||||
Unamortized debt issuance costs (5) | (1,150) | (514) | ||||||||||||||||||||||||
| Debt, net of unamortized debt issuance costs | $ | 1,098,850 | $ | 1,095,294 | ||||||||||||||||||||||
Weighted-Average Interest Rate (6) | 4.98% | |||||||||||||||||||||||||
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(1)In connection with the Seventh Amended and Restated Credit Agreement, the existing $300.0 million unsecured term loan maturing in January 2026 was refinanced with two new $300.0 million unsecured term loans.
(2)Interest rate as of December 31, 2025 was 4.86%, which includes the effect of interest rate swaps.
(3)Maturity date may be extended for two additional six-month periods upon the payment of applicable fees and the satisfaction of certain customary conditions.
(4)Interest rate as of December 31, 2025 was 5.01%.
(5)Excludes debt issuance costs related to our senior unsecured credit facility, which are included within Prepaid and Other Assets on the accompanying consolidated balance sheets.
(6)Includes the effect of interest rate swaps. See Note 6 for additional disclosures on interest rate swaps.
As of December 31, 2025, the aggregate debt maturities for our mortgage debt and unsecured term loans, assuming all extension options available in our debt agreements are exercised, are as follows (in thousands):
| 2026 | $ | — | |||
| 2027 | — | ||||
| 2028 | — | ||||
| 2029 | 500,000 | ||||
| 2030 | 600,000 | ||||
| $ | 1,100,000 | ||||
Senior Unsecured Credit Facility and Unsecured Term Loans
Prior to July 22, 2025, we were party to a Sixth Amended and Restated Credit Agreement that provided us with a $400.0 million senior unsecured revolving credit facility and two term loan facilities in the aggregate amount of $800.0 million. The revolving credit facility was scheduled to mature on September 27, 2026, which we could extend for an additional year upon the payment of applicable fees and satisfaction of certain standard conditions. The term loan facilities consisted of a $500.0 million term loan maturing on January 3, 2028 and a $300.0 million term loan maturing January 3, 2026. We had the
right to increase the aggregate amount of the facilities to $1.4 billion upon the satisfaction of certain standard conditions. On July 2, 2025, we drew $60.0 million on our senior unsecured revolving credit facility, which was subsequently repaid.
On July 22, 2025, we entered into the Seventh Amended and Restated Credit Agreement (the “Amended Credit Facility”). The Amended Credit Facility increased the size of the Company’s existing credit facility from $1.2 billion to $1.5 billion and extended its maturity schedule. The Amended Credit Facility provides for a $400.0 million revolving credit facility (the “Revolving Credit Facility”) and three term loan facilities in the aggregate amount of $1.1 billion. The Revolving Credit Facility matures on January 22, 2030. The term loan facilities consist of a $500.0 million term loan that matures on January 3, 2028 (the “Term 1 Loan”), a $300.0 million term loan that matures January 22, 2030 (the “Term 2 Loan”) and a $300.0 million term loan that matures on January 22, 2029 (the “Term 3 Loan”). The maturity date of the Revolving Credit Facility, Term 1 Loan and Term 3 Loan may be extended for two additional six-month periods upon the payment of applicable fees and satisfaction of certain standard conditions. The Company also has the right to increase the aggregate capacity of the Amended Credit Facility to $1.8 billion upon the satisfaction of certain standard conditions. The incremental proceeds from the upsizing of the Amended Credit Facility were utilized to fund the three mortgage loan maturities in 2025. As of December 31, 2025, we had $400.0 million of borrowing capacity under the Revolving Credit Facility.
In connection with the Amended Credit Facility, we incurred $11.1 million of debt issuance costs, of which $1.1 million was recognized as a reduction to the outstanding debt balance in our consolidated balance sheet and $4.4 million was recognized within Prepaid and Other Assets in our consolidated balance sheet. These debt issuance costs will be amortized to interest expense through the respective maturity dates of the related instruments. The remaining $5.6 million of debt issuance costs and $0.2 million of unamortized debt issuance costs were recognized as a loss on debt extinguishment in our consolidated statement of operations and comprehensive income for the year ended December 31, 2025.
As of December 31, 2025, interest was paid on the periodic advances on the Revolving Credit Facility and amounts outstanding on the term loans at varying rates, based upon the adjusted Secured Overnight Financing Rate (“SOFR”), as defined in the Amended Credit Facility, plus an applicable margin. The applicable margin is based upon our leverage ratio, as follows:
| Leverage Ratio | Applicable Margin for Revolving Loans | Applicable Margin for Term Loans | ||||||||||||
| Less than 30% | 1.40% | 1.35% | ||||||||||||
| Greater than or equal to 30% but less than 35% | 1.45% | 1.40% | ||||||||||||
| Greater than or equal to 35% but less than 40% | 1.50% | 1.45% | ||||||||||||
| Greater than or equal to 40% but less than 45% | 1.60% | 1.55% | ||||||||||||
| Greater than or equal to 45% but less than 50% | 1.80% | 1.75% | ||||||||||||
| Greater than or equal to 50% but less than 55% | 1.95% | 1.85% | ||||||||||||
| Greater than or equal to 55% | 2.25% | 2.20% | ||||||||||||
The Amended Credit Facility contains various financial covenants. A summary of the most significant covenants are as follows:
| Actual at | |||||||||||
| Covenant | December 31, 2025 | ||||||||||
Maximum leverage ratio (1) | 60% | 27.6% | |||||||||
Minimum fixed charge coverage ratio (2) | 1.50x | 3.38 | |||||||||
| Secured recourse indebtedness | Less than 45% of Total Asset Value | N/A | |||||||||
| Unencumbered leverage ratio | 60.0% | 31.9% | |||||||||
| Unencumbered implied debt service coverage ratio | 1.20x | 2.35x | |||||||||
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(1)Leverage ratio is net indebtedness, as defined in the Amended Credit Facility, divided by total asset value, defined in the Amended Credit Facility as the value of our owned hotels based on hotel net operating income divided by a defined capitalization rate.
(2)Fixed charge coverage ratio is Adjusted EBITDA, generally defined in the Amended Credit Facility as EBITDA less FF&E reserves, for the most recent trailing 12 month period, to fixed charges, which is defined in the Amended Credit Facility as interest expense, all regularly scheduled principal payments and payments on capitalized lease obligations, for the same 12 month period.
Mortgage Debt
We previously incurred limited recourse, property specific mortgage debt secured by certain of our hotels. On August 6, 2024, we repaid the Courtyard New York Manhattan/Midtown East mortgage loan using cash on hand. On May 6, 2025, we repaid the Worthington Renaissance Fort Worth Hotel mortgage loan using cash on hand. On July 2, 2025, we drew $60.0 million on our revolving credit facility, the proceeds from which were used to repay the Hotel Clio mortgage loan on its maturity date of July 3, 2025. The $60.0 million draw was repaid on July 22, 2025. On September 5, 2025, we repaid the Westin Boston Seaport District mortgage loan using proceeds from the Amended Credit Facility. Following this repayment, the Company's portfolio is fully unencumbered by secured debt.
The components of the Company's interest expense consisted of the following (in thousands):
| Year Ended December 31, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| Unsecured term loan interest | $ | 50,394 | $ | 47,232 | $ | 43,294 | ||||||||||||||
| Mortgage debt interest | 7,211 | 14,753 | 16,436 | |||||||||||||||||
| Credit facility interest and unused fees | 1,337 | 1,253 | 1,256 | |||||||||||||||||
| Amortization of debt issuance costs | 1,972 | 1,967 | 2,053 | |||||||||||||||||
| Interest rate swap mark-to-market | — | — | 2,033 | |||||||||||||||||
Finance lease expense(1) | 1,884 | $ | 311 | $ | — | |||||||||||||||
| $ | 62,798 | $ | 65,516 | $ | 65,072 | |||||||||||||||
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(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.
About Debt Disclosures
Debt disclosures detail a company's borrowing structure — the types of instruments, interest rates, maturity schedule, and covenant restrictions that define its financial obligations and flexibility. This section is essential for assessing refinancing risk, interest rate exposure, and the margin of safety against financial distress.
Key signals: the maturity schedule reveals concentration risk — large maturities within 1-2 years during tight credit markets can force dilutive refinancing or asset sales. Compare the fair value of debt against carrying amount to gauge whether the market views the company's credit risk differently than the balance sheet suggests. Watch covenant compliance disclosures for tightening cushions, especially leverage and interest coverage ratios. Variable-rate debt exposure quantifies sensitivity to interest rate changes. Secured versus unsecured mix affects recovery rates and future borrowing capacity. Compare net debt-to-EBITDA against industry peers and covenant limits to assess financial health.