RLJ Lodging Trust enters $300 million revolver with 2014 maturity

By Jennifer Chiou

New York, June 24 - RLJ Lodging Trust's operating trust RLJ Lodging Trust, LP entered into an up to $300 million revolving credit facility with Wells Fargo Bank NA as administrative agent on June 20, according to an 8-K filing with the Securities and Exchange Commission.

The Bethesda, Md.-based hotel company is the parent guarantor.

The loan is undrawn as of Thursday.

The credit agreement is scheduled to mature on June 20, 2014, with a one-year extension option.

The commitment may be increased to $450 million, subject to certain conditions, including obtaining lender commitments.

The company may use up to $30 million of the available amount for letters of credit. There is swingline loan capacity for up to $40 million.

The filing stated that the amount that RLJ is permitted to borrow is generally limited to the lesser of the amount, if any, by which 55% of the value of an unencumbered pool of hotel properties that satisfy certain requirements exceeds the aggregate amount of unsecured debt of the company and its subsidiaries on a consolidated basis and the $300 million maximum aggregate loan commitment.

Borrowings will bear interest at Libor plus 225 basis points to 325 bps, depending on the total leverage ratio of the company and its subsidiaries.

There is an unused commitment fee of 30 bps to 40 bps.

Covenants include a required ratio of:

• Total debt to EBITDA of no more than 6.5 to 1.0, reducing to 6.0 to 1.0 on June 30, 2012 and thereafter;

• Adjusted EBITDA to fixed charges of not less than 1.4 to 1.0, increasing to 1.5 to 1.0 on Sept. 30, 2012;

• Secured debt to total asset value of no more than 55%, reducing to 50% for the period from March 31, 2013 through and including March 30, 2014, and reducing to 45% for all periods thereafter;

• Secured recourse debt to total asset value of no more than 10%; and

• Adjusted net operating income of the unencumbered pool to unsecured interest expense of at least 2.0 to 1.0.

The company must also keep tangible net worth of at least $1,528,025,000, plus 75% of the net proceeds of any future equity issuances.

Proceeds are earmarked for the payment of redevelopment and development costs incurred in connection with hotel properties, the financing of hotel acquisitions and capital expenditures as well as dividends and the repayment of debt. Funds will also be available for general corporate purposes.

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