Host Hotels amends revolver, two term loans totaling $2 billion

By Taylor Fox

New York, Feb. 10 – Host Hotels & Resorts, Inc. completed a second amendment to the credit agreement dated Aug. 1, 2019 governing its $1.5 billion revolving credit facility and two $500 million term loans, according to a news release.

“We obtained new industry-leading amendment terms that provide continued covenant relief while significantly enhancing our flexibility to capitalize on investment opportunities that can create long-term value for our stakeholders,” said Host Hotels executive vice president, chief financial officer and treasurer Sourav Ghosh in the release.

The amendment includes a continued waiver of all quarterly-tested financial covenants through the first quarter of 2022, with testing resuming for the second quarter of 2022. For that initial test period, only the fixed-charge coverage ratio covenant will be tested with a minimum requirement of 1.0x, and all other covenants are waived until the quarter ending Sept. 30, 2022.

The amendment also modifies the leverage covenant to ease compliance for the first five quarters following the first test period, with maximum leverage thresholds of 8.5x for the quarters ending Sept. 30, 2022 and Dec. 31, 2022; 8.0x for the quarters ending March 31, 2023 and June 30, 2023; 7.5x for the quarter ending Sept. 30, 2023 and 7.25x after that.

In addition, the amended agreement includes the ability to retain $500 million from asset sales for the purpose of reinvesting in acquisitions unencumbered by debt in addition to the prior ability to reinvest $750 million of net sale proceeds through the like-kind-exchange exchange process.

The amendment gives permission to acquire assets up to $2 billion with existing liquidity and the asset sales described above as long as the company maintains total minimum liquidity of $600 million.

The company will also be able to fund $450 million in ROI capital expenditures during the extended covenant relief period in addition to any unused amount of the $500 million capacity under a previous amendment, as well as to complete capital expenditures incurred in connection with emergency repairs, life safety repairs or ordinary course maintenance repairs.

The company did not incur any increases in pricing through this amendment.

Host Hotels is a real estate investment trust based in Bethesda, Md., that owns and operates hotel properties.

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