Massachusetts based real estate investment trust (REIT) Hospitality Properties Trust (HPT) recast its credit facility for $1.15 billion. Notably, this comprises its existing unsecured revolving credit facility and unsecured term loan of $750 million and $400 million, respectively.
With a consortium of 24 banks, Hospitality Properties amended its existing credit facilities. The revolving credit facility of $750 million is now set to mature on Jul 15, 2018, extending from the previous date of Sep 7, 2015. Interest paid on drawings decreased 20 basis points (bps) to LIBOR plus 110 bps.
Further, facility fee charged on the total limit decreased 10 bps to 30 bps. Moreover, as one of the features, the revolving credit facility may be extended by another year at the company’s discretion.
Hospitality Properties’ unsecured term loan of $400 million has been modified with the extension of its maturity date to Apr 15, 2019 from the previous date of Mar 13, 2017. Further, interest paid on drawings decreased 25 bps to LIBOR plus 120 basis points.
Notably, any change in Hospitality Properties’ credit ratings will influence the premium over LIBOR and the facility fee. Further, under certain conditions, the company’s total borrowing capacity can be increased to a maximum of $2.3 billion.
Joint Lead Arrangers for the new facility include Wells Fargo Securities, LLC, an arm of Wells Fargo & Company (WFC), Merrill Lynch, Pierce, Fenner & Smith Inc., and PNC Capital Markets, LLC, a subsidiary of The PNC Financial Services Group, Inc. (PNC).
The recast of the credit facility is encouraging for Hospitality Properties, as it paves the way for lower interest expenses and financial flexibility to pursue its growth initiatives.
Hospitality Properties currently carries a Zacks Rank #4 (Sell). Among other REITs, Getty Realty Corp. (GTY) with a Zacks Rank #2 (Buy) is worth considering.
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