Host Hotels details amendments to $2.5 billion credit facility

By Marisa Wong

Los Angeles, Jan. 5 – Host Hotels & Resorts, LP, general partner to Host Hotels & Resorts, Inc., disclosed details of the amendment and restatement of its existing senior unsecured bank credit facility dated Aug. 1, 2019 in an 8-K filed Thursday with the Securities and Exchange Commission.

Host Hotels replaced and refinanced its existing $1.5 billion revolving credit facility tranche that was scheduled to mature in January 2024 with a new revolving tranche in the same committed amount; its existing $500 million term loan facility tranche that was scheduled to mature in January 2024 with a new term loan A-1 tranche in the same principal amount; and its existing $500 million term loan facility tranche that was scheduled to mature in January 2025 with a new term loan A-2 tranche in the same principal amount.

The restatement provides for, among other things, the following:

• An interest rate on all dollar-denominated borrowings based on SOFR plus a credit spread adjustment of 10 basis points plus a margin that varies according to the company’s unsecured long-term debt rating, ranging from 72.5 bps to 140 bps for the revolver and 80 bps to 160 bps for the term loans;

• In the case of the revolver, a facility fee ranging from 12.5 bps to 30 bps, determined according to the company’s unsecured long-term debt rating;

• Implementation of a sustainability pricing adjustment for periods after the fiscal year ended Dec. 31 that, in the case of the revolver, can result in an increase or decrease of the interest rate of up to 4 bps and an increase or decrease of the facility fee of up to 1 bps and, in the case of the term loans, can result in an increase or decrease of the interest rate of up to 5 bps, with the amount of that adjustment to be determined annually on the basis of an annual audited report of Host’s performance against certain targets for the percentage of its consolidated portfolio with green building certifications and the percentage of electricity used at all of its consolidated properties generated by renewable resources;

• A maturity date of Jan. 4, 2027 for the revolver, subject to a one-year extension option or two six-month extension options, subject to payment of an extension fee; Jan. 4, 2027 for the term A-1 loan, which can be extended by one year with payment of an extension fee; and Jan. 4, 2028 in the case of the term A-2 loan;

• A foreign currency subfacility for Canadian dollars, Australian dollars, euros, pounds sterling and, if available to the lenders, Mexican pesos of up to the foreign currency equivalent of $500 million, subject to a lower amount in the case of peso-denominated borrowings;

• An option for the company to add in the future up to $500 million of commitments, which may be used for additional revolving credit facility borrowings or term loans;

• A subfacility of up to $100 million for swingline borrowings and a subfacility of up to $100 million for issuances of letters of credit;

• No required scheduled amortization payments prior to the maturity date of the revolver, the term A-1 loan or the term A-2 loan; and

• Financial covenants that are the same as under the existing credit agreement, including that the fixed-charge coverage ratio may not be less than 1.25 to 1.00, the leverage ratio may not exceed 7.25 to 1.00 and the unsecured interest coverage ratio may not be less than 1.75 to 1.00 if the leverage ratio is less than 7.00 to 1.00, or 1.50 to 1.00 if the leverage ratio is equal to or greater than 7.00 to 1.00.

The restatement imposes restrictions on customary matters that were also restricted in the existing credit agreement. As with the existing agreement, some covenants are less restrictive at any time that the company’s leverage ratio is below 6.00 to 1.00. In particular, at any time that the leverage ratio is below 6.00 to 1.00, the covenants in respect of dividends and other restricted payments are not applicable, and acquisition and investment transactions are generally permitted without limitation as long as the company is in compliance with the financial covenants under the restated agreement.

The restatement also includes financial covenant tests applicable to the incurrence of debt that are generally consistent with the limitations applicable under the senior notes indentures for the company’s investment-grade senior notes.

Borrowings under the restated facility may be used for working capital and other general corporate purposes, including for acquisitions.

As of Jan. 4, the company had no amounts outstanding under the revolver other than existing letters of credit, $500 million outstanding under the term A-1 loan and $500 million outstanding under the term A-2 loan.

Bank of America, NA is administrative agent.

Wells Fargo Securities, LLC, BofA Securities, Inc., JPMorgan Chase Bank, NA, Bank of Nova Scotia, PNC Capital Markets LLC, Truist Securities, Inc. and TD Bank, NA are the joint lead arrangers.

Wells Fargo Securities, BofA Securities and JPMorgan are joint bookrunners.

Wells Fargo Bank, NA and JPMorgan are co-syndication agents.

Scotiabank, PNC Bank, NA, Truist Bank, NA, TD Bank, Bank of New York Mellon, Sumitomo Mitsui Banking Corp., Goldman Sachs Bank USA, Morgan Stanley Senior Funding, Inc. and Credit Agricole CIB are documentation agents.

Credit Agricole is sustainability structuring agent.

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

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