In a bid to increase its financial flexibility, Pebblebrook Hotel Trust PEB has successfully completed a new $100-million unsecured term loan facility with a maturity period of 7 years. The Bethesda, MD-based real estate investment trust (“REIT”) intends to utilize the loan proceeds for supporting its future financing activities.
The interest rate attached to this unsecured term loan is based on a price range of 170–255 basis points over the London Interbank Offered Rate (“LIBOR”), depending upon the company’s leverage ratio. For this loan, LIBOR has been kept fixed over the 7-year period. Given the present leverage ratio, the rate of interest on this unsecured loan is fixed at 3.46%. Further, as per terms of the loan, Pebblebrook Hotel may be allowed an additional lender commitment for a maximum amount of $200 million.
Pebblebrook Hotel is primarily engaged in acquisition of and investment in upper-upscale, full-service hotels at urban markets in major gateway cities. Nevertheless, this deal, offering a fixed-rate loan with favorable terms, will help the company extend its debt maturities. The company plans to use the loan proceeds for financing other activities, which include reinvestment of capital in renovations and repositioning schemes, repayment of debt under its unsecured revolving credit facility and funding future acquisitions.
Currently, Pebblebrook Hotel carries a Zacks Rank #3 (Hold).
Investors interested in the REIT sector may consider stocks like Ashford Hospitality Trust, Inc. AHT, CoreSite Realty Corporation COR and Gladstone Land Corporation LAND. All these stocks sport a Zacks Rank #1 (Strong Buy).
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