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Summit Hotel cuts rate on $125 million loan to Libor plus 225-275 bps
By Susanna Moon
Chicago, May 23 - Summit Hotel Properties, Inc. said it reduced the interest rate on its $125 million senior secured revolving credit facility to Libor plus 225 basis points to 275 bps based on leverage, with no Libor floor.
The amended facility is now due in May 16, 2015, extended from April 29, 2014.
The company said it improved its debt structure by cutting borrowing costs and expanding the borrowing base to up to 60% of the total borrowing base value, up from 55%.
Summit Hotel OP, LP, as borrower, and Summit Hotel Properties, Inc., as guarantor, completed the third amendment to its credit agreement last Thursday with Deutsche Bank AG, New York Branch as administrative agent, according to an 8-K filing with the Securities and Exchange Commission.
The interest rate was reduced from Libor plus 250 bps to 350 bps, based on leverage, with a 0.5% floor.
Under the amended terms, the unused fee is 37.5 bps, down from 50 bps, if the average daily facility exposure is less than 50% of the total revolving credit commitments. Otherwise, the unused fee will be 25 bps, down from 37.5 bps.
The maximum leverage ratio covenant was amended to require the company to maintain a leverage ratio of no more than 7.25 times at closing, eventually stepping down to 5.75 times by July 1, 2014.
"The amended terms of our credit facility allow our company to lower our cost of capital while gaining flexibility in executing our acquisition strategy," Dan Hansen, company president and chief executive officer, said in a company press release.
Summit is a Sioux Falls, S.D.-based real estate investment trust.
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