Hersha Hospitality closes on new $200 million five-year term loan

By Wendy Van Sickle

Columbus, Ohio, Aug. 3 – Hersha Hospitality Trust closed on a new $200 million five-year senior unsecured term loan, according to a press release.

The loan was arranged by Citibank, NA and Wells Fargo Bank, NA, as joint lead arrangers and bookrunning managers. Bank of America, NA, Manufacturers and Traders Trust Co., U.S. Bank NA, Compass Bank and BMO Harris Bank, NA acted as co-documentation agents.

Interest ranges from Libor plus 145 basis points to 220 bps, based on the company’s leverage ratio.

At closing, $50 million was advanced as a single draw. The remaining $150 million will be available to Hersha on a delayed-draw basis for up to nine months in one or more advances.

Proceeds will be used to refinance existing debt, as well as to repay transaction expenses and for general corporate purposes, potential acquisitions and capital expenditures.

The new term loan, together with Hersha’s existing term loans and revolving line of credit, expands the company’s senior unsecured borrowing capacity to $1 billion from $800 million.

“The new term loan sustains the significant efforts undertaken to optimize our balance sheet and provides additional flexibility to execute our business plan,” Ashish R. Parikh, Hersha chief financial officer, said in the release.

“Furthermore, this new term loan addresses our 2016 and 2017 debt maturities, resulting in estimated interest expense savings of approximately $7 million on a full-year pro forma basis.”

Hersha is a Philadelphia-based real estate investment trust.

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