Hersha Hospitality unit enters credit agreement for $500 million

By Mary-Katherine Stinson

Lexington, Ky., Aug. 8 – Hersha Hospitality Trust and certain subsidiaries said its operating partnership Hersha Hospitality LP entered a credit agreement on Aug. 4 which provides a $100 million senior secured revolving line of credit and a $400 million senior secured term loan, according to an 8-K filing with the Securities and Exchange Commission.

The maturity date for the new revolver and the term loan is Aug. 4, 2024 with one optional 12-month extension for either or both the revolver or the term loan facility subject to certain conditions.

All borrowings under the credit agreement will bear interest at a rate equal to term SOFR plus 10 basis points plus the applicable margin. The applicable margin is 250 bps, subject to a 0% floor.

The agreement also permits the issuance of letters of credit.

Availability under the credit agreement is based on the lesser of the total revolving commitments and term loan commitments and the least of the borrowing base value attributable to borrowing base assets, the amount equaling a ratio of 12% of adjusted net operating income for all borrowing base assets to the available amount of outstanding letters of credit plus the outstanding advances and the amount equaling a ratio of 55% of all outstanding advances and letters of credit to the value of all borrowing base assets.

There are 18 hotel properties that are listed as borrowing base assets as of closing. They are the Boxer, NU Hotel, Parrot Key Resort, Winter Haven Hotel, Blue Moon Hotel, the Rittenhouse, Cadillac Hotel and Beach Club Miami Beach, Hampton Inn Manhattan-Seaport Financial District, Hilton Garden Inn JFK, Hyatt House White Plains, Holiday Inn Express 29th Street, Envoy Hotel, Ambrose Hotel, Mystic Marriot, the Westin Philadelphia, Gate JFK Airport Hotel, Ritz Carlton Georgetown, and the Pan Pacific Hotel.

All the properties other than Gate JFK Airport Hotel and Ritz Carlton Georgetown are subject to a mortgage or deed of trust, securing debt and other obligations under the credit agreement.

Citibank, NA is acting as the administrative agent and collateral agent.

The term loan refinancing was arranged by Citibank, Wells Fargo Securities, LLC and Manufacturers and Traders Trust Co. as joint lead arrangers and joint bookrunners.

Wells Fargo Bank, NA and Manufacturers and Traders Trust acted as co-syndication agents.

Fifth Third Bank and Wilmington Savings Fund Society, FSB acted as co-documentation agents.

Other participating lenders include Goldman Sachs Bank USA, Raymond James Bank, NA, Huntington National Bank and Provident Bank.

On closing, $400 million of the new senior secured facility was immediately drawn and, along with other funds, was used to pay and terminate the company’s prior facilities consisting of a term loan agreement dated as of Aug. 2, 2016, a second amended and restated credit agreement dated as of Aug. 10, 2017 and an amended and restated term loan agreement dated as of Sept. 10, 2019.

Also, in conjunction with the closing, the company fully redeemed its junior subordinated notes at 104 for a total of approximately $164.4 million plus accrued interest. The notes were issued Feb. 17, 2021.

The Philadelphia-based real estate investment trust owns and operates upscale hotels.

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