Strategic obtains $300 million revolver priced at Libor plus 200 bps

By Marisa Wong

Madison, Wis., May 1 - Strategic Hotels & Resorts, Inc.'s operating partnership, Strategic Hotel Funding LLC, entered into a credit agreement on April 25 for a $300 million secured revolving credit facility, according to an 8-K filing with the Securities and Exchange Commission.

Deutsche Bank AG New York Branch is the administrative agent; Deutsche Bank Securities Inc. and J.P. Morgan Securities LLC are co-lead arrangers and joint bookrunning managers; JPMorgan Chase Bank, NA is the syndication agent; and Bank of America, NA, BMO Harris Bank NA, Capital One Bank NA, Sumitomo Mitsui banking Corp. and Wells Fargo Bank, NA are co-documentation agents.

The facility replaces Strategic's $300 million credit facility dated June 30, 2011 with Deutsche Bank Trust Co. Americas as administrative agent. The prior facility, which was set to mature in June 2015, was terminated on April 25.

The new revolving facility includes swingline loans and letter-of-credit sub-facilities and is secured by an equity pledge in direct and indirect subsidiaries that own, lease or operate five of the company's assets: the Four Seasons Jackson Hole, Four Seasons Silicon Valley, Marriott Lincolnshire, Ritz-Carlton Half Moon Bay and Ritz-Carlton Laguna Niguel hotels.

The credit agreement contains an accordion feature, giving the company the option to increase the borrowing capacity up to $400 million.

The facility matures on April 25, 2018, subject to a one-year extension.

Interest ranges from Libor plus 175 basis points to Libor plus 250 bps, depending on leverage. The initial rate is Libor plus 200 bps, which is a reduction from the previous facility's pricing of Libor plus 275 bps, according to a press release.

The facility may be prepaid in whole or in part and without penalty but is also subject to mandatory prepayment under certain circumstances. In addition, if the total amount outstanding under the facility exceeds specified thresholds, the borrower must repay that excess amount immediately and must also provide cash collateral in an amount equal to the excess to collateralize any outstanding letters of credit.

The credit agreement contains, among others, financial covenants requiring the company to maintain a specific level of net worth and other financial markers.

Loan proceeds will be used for ongoing working capital requirements and general corporate purposes.

Strategic is a real estate investment trust based in Chicago.

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