Chatham Lodging again amends revolver to waive key financial covenants

By Cady Vishniac

Detroit, Dec. 17 – Chatham Lodging Trust again amended its revolving credit facility to waive key financial covenants through Dec. 31, 2021, with testing of the covenants as of March 31, 2022, according to a press release.

As previously reported, the company waived key financial requirements until March 31, 2021 with a May 2020 amendment. All changes in terms made with the May amendment remain in place with the new amendment.

The May amendment allowed the trust to borrow the full amount of the $250 million credit facility. The applicable margin on borrowings was set at Libor plus 250 basis points for borrowings under $200 million and Libor plus 300 bps for borrowings over $200 million. Minimum liquidity was set at $25 million in cash or available capacity under the revolver, and common share dividends were limited to 100% of the trust’s taxable income, with any dividends including a cash component no greater than the minimum percentage allowed under the Internal Revenue Code.

As of the new amendment, Chatham had estimated liquidity of $146 million, including cash of approximately $32 million as of Sept. 30 and remaining borrowing capacity on the credit facility of $114 million.

Chatham’s key credit ratios have also been enhanced by the sale of the Residence Inn San Diego Mission Valley and the pending sale of a joint venture with Colony Capital. Pro forma leverage has gone to 35% from 38% based on the ratio of the company’s pro forma net debt to hotel investments at cost as of Sept. 30, and Chatham’s pro forma 2019 net debt to EBITDA ratio has decreased to 4.7x from 5.7x.

Participating lenders on the credit facility include Barclays, Regions Capital Markets, Citibank, NA, US Bank NA, Wells Fargo Bank, NA, Bank of America, NA, Citizens Bank, NA and BMO Harris Bank NA.

Chatham Lodging Trust is a Palm Beach, Fla.-based real estate investment trust that invests in upscale extended-stay hotels and premium-branded select-service hotels.

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