Host Marriott obtains new $400 million revolver

By Sara Rosenberg

New York, June 14 - Host Marriott Corp. completed the syndication of a new $400 million revolving credit facility to replace the prior credit line, according to a company press release. Deutsche Bank Trust Company Americas was administrative agent, Bank of America NA was syndication agent and Wells Fargo Bank NA, Citicorp Real Estate Inc. and Credit Lyonnais New York Branch were co-documentation agents.

The Bethesda, Md. real estate investment trust's revolver initially provides for a credit line of $300 million and an additional $100 million will become available after the leverage ratio falls below specified levels, according to a filing with the Securities and Exchange Commission. There are no amounts outstanding under the revolver.

The revolver matures in June 2005, with an option to extend for an additional year, and will bear interest at a floating rate (see Table 1), the release said. There is a commitment fee of 55 basis points if less then 50% of the loan is used. If more then 50% but less then 75% is drawn, there is a commitment fee of 45 basis points. Lastly, if more then 75% is used, there is a commitment fee of 35 basis points. Security is pledges of equity interests in many of the company's subsidiaries, the filing said.

Financial covenants under the agreement are fewer and less stringent than covenants on the prior facility, according to the SEC filing. Covenants impose fewer limitations on the company's ability to incur additional indebtedness, grant liens on assets, enter into affiliate transactions, pay dividends and make acquisitions, investments and certain capital expenditures.

"We are extremely pleased with this transaction," said Robert Parsons, executive vice president and chief financial officer, in a news release. "The new credit facility has an initial maturity which is two years beyond the maturity of the credit facility it replaced. While pricing on the new credit facility is comparable to the facility it replaced, we have achieved much greater flexibility.

"Coupled with the significant cash balances that we are currently holding, this new facility will enable us to take advantage of expected future opportunities. Our credit facility, which was significantly oversubscribed and included a syndicate of fourteen lending institutions, confirms Host Marriott's ongoing ability to access the capital markets."

Table 1: Pricing for Host Marriott's new credit facility

Leverage Ratio Base Rate Loans Eurodollar Rate Loans

Less than 5:00:1.00 1.50% 2.50%

5.00:1.00 or greater but less than 5.50:1.00 1.75% 2.75%

5.50:1.00 or greater but less than 6.00:1.00 2.00% 3.00%

6.00:1.00 or greater but less than 6.50:1.00 2.25% 3.25%

6.50:1.00 or greater but less than 7.00:1.00 2.50% 3.50%

7.00:1.00 or greater than or equal to 2.75% 3.75%

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