Summit Hotel Properties enters into $225 million term loan due 2022

By Wendy Van Sickle

Columbus, Ohio, Oct. 2 – Summit Hotel Properties, Inc. entered into a new $225 million term loan due Nov. 25, 2022 on Sept. 26, according to an 8-K filing with the Securities and Exchange Commission.

KeyBanc Capital Markets, Inc., Deutsche Bank Securities, Inc. and Bank of America Merrill Lynch are the joint bookrunners and joint lead arrangers.

KeyBank NA is the administrative agent, and Deutsche Bank AG New York Branch and Bank of America, NA the co-syndication agents.

There is an accordion feature allowing for up to $175 million of additional commitments.

The interest rate is Libor plus a margin of 155 basis points initially. The margin can range from 145 bps to 220 bps, depending on the company’s leverage ratio.

At closing, Summit drew $125 million under the term loan and used the proceeds to pay down the principal balance of its $300 million unsecured revolving credit facility entered in January 2016.

Summit may make up to three additional draws prior to Sept. 20, 2018

There is an unused fee of 25 bps beginning Dec. 25.

Future borrowings may be used for general corporate purposes.

Outstanding borrowings are limited to the least of (1) the aggregate commitments of all of the lenders, (2) an amount such that the ratio of the consolidated unsecured debt of the company to the aggregate value of the unencumbered assets does not exceed 60% and (3) an amount such that the ratio of unencumbered adjusted net operating income to assumed unsecured interest expense is equal to or greater than 2.00 to 1.00.

Summit must comply with some financial covenants including a maximum leverage ratio of 6.50 to 1.00 and a minimum fixed-charge coverage ratio of 1.50 to 1.00.

Summit is an Austin, Texas-based real estate investment trust focused on hotels.

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