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Summit Hotel closes on $450 million senior unsecured credit facility
By Tali Rackner
Norfolk, Va., Jan. 20 – Summit Hotel Properties, Inc. closed on a new $450 million senior unsecured credit facility on Jan. 15 with Deutsche Bank AG New York Branch as administrative agent, according to an 8-K filing with the Securities and Exchange Commission.
The facility is comprised of a $300 million revolving credit facility and a $150 million term loan and replaces the former $300 million senior unsecured credit facility dated Oct. 10, 2013.
There is an up to $150 million accordion feature.
The revolver matures on March 31, 2020 and can be extended by one year. The term loan matures on March 31, 2021.
Interest on the revolver is Libor plus 150 basis points to 225 bps, based on the company’s leverage ratio.
Interest on the term loan is Libor plus 145 basis points to 220 bps.
The commitment fee on the unused portion is 25 bps if the unused amount is greater than 50% of the maximum aggregate amount of the facility, or 20 bps otherwise.
Certain financial covenants require Summit to maintain a maximum leverage ratio of 6 times provided, however, in the event of a material acquisition, it can be increased to 6.75 times for up to three consecutive quarters and no more than 2 times during the term so long as the elections are not consecutive.
The company must also maintain a minimum consolidated fixed-charge coverage ratio of 1.5 times.
Proceeds from the term loan were applied to Summit’s former $75 million unsecured term loan and $225 million unsecured revolving line of credit. There was $20 million outstanding and $280 million available on the $300 million line of credit at closing.
Deutsche Bank Securities Inc., Merrill Lynch, Pierce, Fenner & Smith Inc. and Regions Capital Markets acted as joint lead arrangers and bookrunners on the deal.
Summit is an Austin, Texas-based real estate investment trust focused on hotels.
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