You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. 
Text: Neil, you may begin.
We understand it's a busy last few days of the earnings season, and everyone is quite familiar with the environment, so we will jump right in.
During the first weeks of this pandemic, we took decisive action and focused on capital pricing through several critical steps.
We suspended dividend distributions on both our common and preferred securities, preserving approximately $72.5 million, and we deferred all planned capital expenditures for the balance of the year, saving approximately $20 million.
Additionally, at the corporate level, we reduced our SG&A run rate by 25% for 2020.
While at our properties, we suspended operations at 21 of our 48 hotels, which led to a reduction in operating expenses, approximating 80% on a go-forward basis.
These were difficult but necessary moves, and we undertook these actions to ensure we had sufficient flexibility through this pandemic.
Early in the quarter, we amended our credit facility to access our senior revolving credit facility and received a full financial covenant holiday for five quarters with the next covenant test on June 30, 2021.
We've had a decade-long relationship with the lead banks in our bank group, and we appreciate their partnership during this unique time.
We have spent most of the most of the second quarter reopening hotels.
Each of them adapted to a highly efficient operating model, provided anticipatory service from behind plexiglass and engaged a completely new guest profile.
And they did so safely, graciously and effectively.
The lion's share of the 27 hotels that were opened in April and May consisted of our limited service drive-to resort offerings that were able to drive rate and occupancy, exceeding our internal forecasts.
Early April is when we saw the trough for our open portfolio, bottoming out around 19% occupancy but incrementally growing through the balance of the quarter, ending June at 39% occupancy.
Most of the 27 hotels that have remained open throughout the pandemic and the seven hotels that have opened since June one are able to run with a marginally sized staff, allowing for lower breakeven levels and the ability to generate gross operating profit with occupancies around 25% to 30% or a 60% to 70% RevPAR decline for EBITDA level breakeven at properties.
Our focused service portfolio, whether branded or independent, offer significantly more flexibility as it relates to staffing levels and job sharing opportunities, minimizing costs and ultimately allowing us to either profitably maintain operations or reopen assets more expeditiously.
As we've discussed on past calls, our franchise model and close alignment with HHM and our operating teams also allows us to adapt our staffing and operating models in real time.
This close relationship, coupled with our cluster strategy to maximize revenues and generate marketing advantage and economies of scale for cost efficiencies and sales, has yielded consistent market share outperformance versus our comp set prior to the pandemic.
This relationship has proven to be critically beneficial over the past five months in determining which hotels to open, consolidating demand to optimize breakeven and driving local decisions.
This will continue to drive outperformance throughout the recovery phase.
We expect to have substantially all of our hotels operating by the end of September.
And now more than ever, our ability to stay nimble and leverage our flexible operating model in close connection with our independent franchise operator, allows us to reopen and operate our hotels in a cost-efficient manner, gives us the opportunity to reduce our cash burn rates and breakeven levels meaningfully and sets up our portfolio to generate cash flow as we navigate this recovery.
Drive-to resorts have been our strongest performers.
Local regulations and travel bans dictated our opening of these hotels.
But with each month of performance, we are seeing meaningful growth in occupancy and strong rate integrity.
We expect a longer leisure season this year with disrupted schools, work-from-home employees, low gas prices and continued stimulus.
Our Sanctuary Beach resort was the best-performing asset during the second quarter, ending the period at 71% occupancy with a $340 ADR, and success continued in July with RevPAR growth of 12.4% for the month.
The ramp began in mid-April and extended throughout the quarter as travelers became more comfortable leaving their homes and socially distancing on the California coast.
We opened Hotel Milo in Santa Barbara more recently, but it is ramping up quickly, particularly around the weekends, where ADR is close to prior years.
On the East Coast, the Annapolis Waterfront hotel on the Chesapeake and the Mystic Marriott, which opened in mid-June, are delivering operating profits this summer.
South Florida has been more choppy.
Government-mandated closures impacted our portfolio as Key West was closed to visitors and nonessential personnel, and Miami Beach hotels were mandated to close to prohibit the spread of the virus.
Restrictions at both municipalities were lifted on June 1, and this led us to reopening our Parrot Key hotel in Key West and two of our Miami Beach hotels, the Winter Haven and the Cadillac.
Early results in both locations were promising, but notably at the Parrot Key, which saw travelers arrive from the Southeast and even from the Northeast and Midwest.
But the recent rise in case counts across the Sunbelt led to the closure of Miami Beach and restrictions at bars and restaurants in Key West over the July four weekend, which hampered the rapid ramp-up we were seeing in these markets.
We believe occupancies at these hotels will reaccelerate in conjunction with decreasing case counts and easing restrictions across the southern states, but the third quarter may still be challenged with weather or headlines in Miami Beach.
But judging from the number of New Yorkers still coming to Miami in even these conditions, we expect a seasonally high fourth and first quarters to be robust once again in Miami Beach.
Our urban gateway markets have been hard at work.
The headlines surrounding corporate travel, international travel and events remain bleak.
But fortunately, the domestic travel restrictions and quarantines instituted by major coastal cities should ease in the coming weeks and months on a city-by-city basis and should open us up for more leisure travel.
Our operating model alignment with the teams at each of our hotels provides the speed of decision-making on innovative ways to drive operating profits from each of our locations.
We've been able to open hotels as we source new business in each of our clusters, and our limited service business model allows us to staff very efficiently during this low demand period.
Our sales and marketing teams have stayed nimble throughout the pandemic, remaining cognizant of travelers' increased selectivity as it pertains to authentic and relevant experiences, but also proactively staying connected with local demand generators.
This approach was very productive during the second quarter as our team secured contracts with local hospitals and frontline personnel across our portfolio, with perhaps the biggest success in New York City.
We housed government groups and medical staff at our JFK assets, police and fire department crews in Brooklyn and at our Hilton Garden Inns in Tribeca and Midtown East, and lastly, contracted with a leading medical institution in lower Manhattan at our Hampton Inn in the Seaport.
All of this led to 61% occupancy for our seven open New York City hotels during the second quarter.
Our sales team has since pivoted from first responder business to more normal business.
Despite the bleak headlines on corporate travel among the largest companies, some parts of the economy are beginning to travel.
Our sales in our local property teams directly have had success sourcing new business to our hotels.
In Philadelphia, the team secured Major League Baseball and the NFL to build a base for transient compression; in New York, baseball and hockey teams for shorter stays.
In each of our markets, we have sourced significant design and construction business.
There are a lot of buildings to prepare for a post-COVID build-out or projects under development.
In Boston, we contracted a buyout for the Boxer to a local university to house their students from September through May.
For universities and even a hybrid model, travel demand will increase relative to the spring or summer.
We have secured business with TV broadcasters and news organizations in Washington, D.C. Content production and studios are beginning to mobilize in Southern California near our Courtyard West side, and Netflix and other producers are producing on the East Coast cities as well.
All of our submarkets are seeing a more general purpose healthcare business, patients and family for elective surgeries, but also medical equipment and other technology vendors.
Consulting and financial services has been slower to get on the road, but we hear of the first banks beginning to travel or consider buyouts for meetings or allocating inventory hotel inventory for employees to avoid commutes or simply arranging daywork rooms.
Early results from July are promising, with ADR only down 25% across the portfolio year-over-year as occupancy showed some signs of growth, especially in our urban markets outside of New York.
A few more thoughts on New York.
Prior to COVID-19, New York was one of the toughest markets in the U.S. to achieve rate growth despite record visitation year-over-year as the city was seeing new supply increasing approximately 4% each year over the last several years.
We have already seen the headlines of big-box hotels in New York closing their doors forever as many as 5,000 rooms among them so far, and we think of this as the tip of the iceberg in terms of hotel closures.
Industry researchers have estimated that 20% of New York's total room count, about 25,000 keys, could permanently close.
New York City is dominating the headlines as it pertains to hotel closures, but there are corners of every market filled with distressed assets that were troubled to produce margin even before the pandemic.
They are now obsolete and will improve the supply picture.
The pandemic is also bringing about a decline in short-term rental demand as seen in recent data showing the top 25 markets experiencing significant year-over-year decline in inventory available.
Five of the top MSAs, including Boston, New York and Los Angeles, are seeing year-over-year declines from 25% to 40%.
Travelers are choosing the proven cleanliness of hotels versus the unknown of short-term rentals, and cities and landlords are finally enforcing current regulations and forcing transparency.
The pandemic will fundamentally change the models of these platforms as we've already seen in Airbnb strategy's shift to longer duration stays versus short-term offerings, and these changes will be materially positive for hotel portfolios with urban gateway market exposure like Hersha's.
Hersha has been a developer, owner and operator in New York for over 20 years.
Post 9/11, we increased our development pipeline in Manhattan.
Post GFC, we acquired troubled developers hotels under construction.
This time, we have sufficient exposure to Manhattan, but expect to enjoy a strong recovery in New York in the next 12 to 24 months.
After 9/11 and after the GFC, New York rebounded with the highest growth rates in the country for the early years of the recovery.
After 9/11, there were significant deletions from supply.
So after a steep recovery in 2003 and 2004, the market continued to produce double-digit RevPAR for three more years.
Post 2009, New York rebounded quickly in 2010 and continue to grow in mid-single digits for three to four more years, but new supply made the rest of the cycle a bit more choppy, although values continue to reach new highs.
This time, as demand returns, the supply story will be very different.
More permanent hotel closures, no construction financing, zoning restrictions for hotel development,etc.
And we expect our category killing select service portfolio in New York can meaningfully outperform.
Before transitioning to Ash to discuss our expense savings and burn rate reductions, I want to update you on our pending asset sales.
As a quick reminder, we announced accretive binding sales agreements on four assets in our portfolio: the Duane Street Hotel in New York City; the Blue Moon hotel on Miami Beach; and the exit of the 50% ownership in two South Boston Hotel, two hotels: The Courtyard South Boston, the Holiday and Express South Boston.
Since our last earnings call, we've had follow-up discussions with each of the buyers who have asked for additional time to close on the individual transactions.
In conjunction with these requests, we negotiated the right to sweep the deposits on each of the consolidated asset dispositions and a buy sell right for our JV.
Along with the extensions, we have provided a reduction in purchase price for the buyers at each of these assets, resulting in total expected net proceeds of $70 million.
We remain cautiously optimistic that these transactions will close as the buyers are not reliant on material financing, but we now anticipate these agreements will close in the fourth quarter or in early 2021.
In addition to these four asset sales, we have multiple levers to pull should the impact to the travel industry remain at depressed levels into the second half of next year, and we continue to explore various strategies to fortify our balance sheet.
Some investors have asked if we would raise additional common equity.
It's hard to see a scenario where that level of dilution would make sense.
We are more likely to sell additional hotels as a private debt market emerges in 2021.
We are encouraged by a thawing, at least in the transaction markets that should gain momentum in the coming three to four months.
Our hotels are differentiated in the acquisitions market.
Nearly all of our hotels are unencumbered of ground leases, management and often brand.
They are newly built or recently repositioned with very little capex required for the foreseeable future.
They are high-quality and well-located in prominent innovation-oriented submarkets in the leading gateway markets of the U.S. Difficult times like these demonstrate the hustle and the accountability of our team.
We have visited most of our hotels across the last few months and are grateful for the quality and character of our team at our hotels and our offices.
It's a tighter group today, but it reminds us that small groups of committed people can do great things.
For Jay, Ash and I, this is our 21st year in the public markets.
We have navigated three cycles and nearly a dozen major demand troughs together.
Past demand troughs have proven that cities and economies rebound and America grows.
Domestic and international travelers get comfortable getting back on planes, trains and automobiles to visit the cities that make up this great nation.
The last several weeks have showed that the recovery for lodging is unlikely to be linear, and near-term forecast indicated it's difficult to pinpoint how business travel will resume after Labor Day.
But the steps we have taken to date and our highly adaptable and flexible operating model will sustain us until we achieve a more stable environment that can showcase the value of our exceptional portfolio.
I'll focus the majority of my time today and the actions we've taken to date from a liquidity preservation perspective, most specifically as it pertains to newly implemented asset management initiatives that have allowed us to minimize our cash burn rate and breakeven levels as we navigate the pandemic.
Our top priorities at the beginning of this outbreak were amending our credit facility and attaining a covenant holiday, which we were able to do in short order and before our peers, but we also focused on cost-saving measures to preserve our liquidity profile and to minimize operational losses.
Our franchise model and close relationship with our third-party independent operators leads to significant flexibility as it relates to executing cost savings initiatives at our hotel, and our ability to make these changes in real-time has led to and will continue to lead to substantial savings for our portfolio.
In our 33 currently operating hotels, we've not only rightsized our on-site staff, but have also employed various asset management initiatives to lower our cost per occupied room, which resulted in a declining monthly cash burn rate through the balance of the second quarter.
Our operational strategy allows us to run our hotels with very lean labor models until demand achieves levels warranting additional staffing, typically between 30% and 40% occupancy.
We're able to do this by applying various cost-cutting strategies such as cross-utilizing management personnel, outsourcing and job sharing within the hotel and across our clusters to lower our overall expense base.
Our franchise model has also allowed us to minimize our property level severance cost through this pandemic.
At the end of the first quarter, we accrued less than $1 million for these costs, and we did not record any further severance costs during the second quarter and would not anticipate any further costs for the remainder of the year.
We've also zero-based budgeted our hotels and rightsized labor models with expectations to save 300 to 500 basis points when lodging returns to more stabilized levels.
As demand begins to pick back up and occupancy levels start to materialize from these low levels, we will begin to phase back in staffing levels as necessary.
We anticipate that the availability of labor will increase dramatically over the next few years with anticipated closures in restaurants, retail and other service industries, alleviating some of the increases in labor costs that we have witnessed during the past three to four years.
We've also focused on revised cleaning protocols, decluttering and scaling back in-room amenities, such as bedding accessories, and other nonessential amenities, pens, bill pads, paper menus,etc.
And we forecast this reduction should generate substantial savings on a guest supplies for occupied room moving forward.
Prior to the pandemic, many of our limited service offerings included a complementary breakfast buffet for our guests, which we have eliminated for safety reasons.
At these hotels, we have turned to a more informal grab-and-go style option, which has not only been well received by our guests, but has significantly brought down our cost per occupied room for this category.
In conjunction with our Earthview Sustainability Team, we've been implementing additional cost-cutting and efficiency measures to curb energy expenses, which will continue creating savings and margin improvements even after the impact of COVID-19.
We're reducing utility costs through operational and energy-saving initiatives, such as lowering heating and cooling set point for rooms and public spaces while also working closely with our engineering teams on preventative maintenance procedures.
All of these measures allowed us to reduce our operating expenses by 77% during the quarter.
And on a long-term basis, we expect many of our newly applied expense mitigation practices to extend beyond the pandemic.
In addition to expense savings measures, we have leveraged our Earthview platform to generate new revenue opportunities, such as a green and wellness strategy that provides various sustainable meeting room options and wellness rooms.
So all of these operating strategies have also positively impacted our breakeven levels.
During the second quarter for the 21 comparable hotels that remained open throughout the period, we were able to effectively breakeven on an EBITDA basis even with severely depressed operational levels as these 21 hotels had a RevPAR decline of 78% and approximately 34% occupancy.
Based on this history, we are comfortable that on a property level basis, our entire portfolio breaks even with a 65% to 70% RevPAR decline with occupancies approaching 40% and a 25% to 30% ADR decrease.
At the corporate level, our RevPAR breakeven occurs at 40% to 50% decline, factoring in 50% to 55% occupancies at a 15% to 20% ADR discount.
With our current operating model, we were able to generate gross operating profit at 80% of our open hotels during June and would anticipate that nearly all of our open hotels can generate positive GOP during the third quarter.
As I mentioned, with the execution of the aforementioned expense savings initiative, we're able to breakeven at below 40% at our open hotel, and we're forecasting that our next 25% to 35% occupancy gains should flow through at approximately 80% to the GOP line.
On our prior earnings call, we outlined our cash burn rate forecast, which was originally projected to be $11 million per month, including all hotel operating expenses, corporate SG&A and debt service expenses.
During April, which we would deem to be the trough of the industry with our comparable portfolio ending the month at 14% occupancy, our corporate cash burn rate actualized at $10.5 million.
Our burn rate sequentially decreased through the balance of the quarter, reducing to $8.6 million for the month of May and closing the quarter at $7.8 million for June.
Our cash burn rate for the second quarter totaled $26.9 million, 18% below our downside scenario and 13% below our internal forecast at the beginning of the period.
During the second quarter, we spent $5.4 million on capital projects, bringing our year-to-date spend to $16.4 million.
We anticipate a significantly reduced capex load for the back half of the year with estimated spend for 2020 at approximately $20 million, half of what we had planned to spend at the beginning of the year.
Since 2017, we've allocated close to $200 million for product upgrades and ROI-generating capital projects across approximately 50% of our total room count.
This puts our portfolio in great shape coming out of this crisis in terms of capital allocation needs and market share gains, and most of our hotels will not need substantial capital infusion for the foreseeable future.
Last quarter, discussions with our lending group resulted in a 5-quarter covenant holiday with our next covenant test set to occur on June 20 June 30, 2021.
Parameters around the covenant tests are yet to be set, and we'll continue to have an active dialogue with our bank group as we move through the balance of the year and into 2021 as to what these tests will look like.
As of June 30, we have drawn $95 million on our $250 million senior credit facility and ended the second quarter with $23.2 million in cash on hand.
During the second quarter, we also took advantage of the low rate environment and entered into a new interest rate swap on the debt at the Courtyard L.A. West side at 3.425%.
As demand scenarios remain unpredictable, we continue to fortify our balance sheet through liquidity enhancing and cost savings measures to navigate this crisis.
Until then, our sales and marketing teams will remain acutely focused on driving incremental revenue through unique opportunities, while our asset management and sustainability teams will continue implementing strategic initiatives to significantly reduce our cost structure, which will lead to a resumption of our industry-leading portfolio free cash flow generation as the recovery progresses across the coming quarters.
So that concludes my portion of the call.
We can now proceed to Q&A, where Jay, Neil and I are happy to address any questions that you may have.

user
suspended its full-year 2020 guidance.

assistant