Host Hotels & Resorts gets $1 billion revolver, $500 million term loan

By Angela McDaniels

Tacoma, Wash., July 2 – Host Hotels & Resorts, Inc. said that Host Hotels& Resorts, LP entered into a new $1 billion senior revolving credit facility and a new $500 million term loan on Friday.

The new facility replaces and refinances the existing $1 billion senior revolver due November 2015 and $500 million term loan due July 2017, according to an 8-K filing with the Securities and Exchange Commission.

The new facility provides for the following:

• An interest rate of Libor plus 87.5 basis points to 155 bps for the revolver and Libor plus 90 bps to 175 bps for the term loan, each based on the borrower’s unsecured long-term debt rating;

• A facility fee of 12.5 bps to 30 bps for the revolver;

• A maturity date of June 27, 2018 for the revolver with two six-month extension options and a maturity date of June 27, 2017 for the term loan with two one-year extension options;

• A foreign-currency subfacility for Canadian dollars, Australian dollars, New Zealand dollars, Japanese yen, euros, British 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 New Zealand dollar and Mexican peso borrowings;

• An option for the borrower to increase the aggregate principal amount of the revolver and/or term loan by up to $500 million;

• A $100 million subfacility for swingline borrowings in U.S. dollars, Canadian dollars, euros or British pounds sterling and a $100 million subfacility for letters of credit;

• No required scheduled amortization payments prior to the maturity date of the revolver or term loan;

• Financial covenants that require the company to maintain a fixed charge coverage ratio of at least 1.25 times, a maximum leverage ratio of 7.25 times and an unsecured interest coverage ratio of at least 1.75 times if its leverage ratio is less than 7 times or 1.5 times if its leverage ratio is greater than 7 times; and

• Financial covenant tests applicable to the incurrence of debt that are consistent with the limitations applicable under the indenture for the company’s series D senior notes.

Borrowings under the new facility may be used for working capital and other general corporate purposes.

As of Friday, the borrower had C$106.9 million, €74.2 million and £11.72 million (for a total of about $220 million) outstanding under the revolver and $500 million outstanding under the term loan.

Based on the borrower’s current long-term debt rating, U.S. dollar-denominated borrowings would result in an initial all-in rate of 1.35% for revolver borrowings and 1.28% for term loan borrowings as of Wednesday.

Bank of America Merrill Lynch, J.P. Morgan Securities LLC and Wells Fargo Securities LLC are the arrangers and bookrunners.

Bank of America, NA is the administrative agent, the swingline lender and a letter of credit issuer. JPMorgan Chase Bank, NA is the syndication agent and a letter of credit issuer. Wells Fargo Bank, NA is a documentation agent and a letter of credit issuer. Deutsche Bank Securities Inc., Bank of Nova Scotia, Bank of New York Mellon, Credit Agricole Corporate and Investment Bank and Goldman Sachs Bank US are documentation agents.

The company said the new facility does not initially include any subsidiary guarantees or pledges of equity interests. Such guarantees and pledges would be required only if the borrower’s leverage ratio later exceeds 6 times for two consecutive fiscal quarters at a time that it does not have an investment-grade long-term unsecured debt rating. If such guarantee and pledge requirement is triggered, the guarantees and pledges would ratably benefit the new facility as well as the notes outstanding under the borrower’s senior notes indenture and some hedging and bank product arrangements.

Host Hotels & Resorts, Inc. is a lodging real estate investment trust based in Bethesda, Md., and the general partner of Host Hotels& Resorts, LP.

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