In a bid to boost its balance sheet strength, Chatham Lodging Trust CLDT has closed a new $250-million senior unsecured revolving credit facility, replacing the prior $175-million secured credit facility scheduled to mature in 2016. The new credit facility, slated to mature in Nov 2020, has an extension option of one year. This facility not only lowers the Palm Beach, FL-based hotel real estate investment trust’s (“REIT”) annual interest expenses, but also enhances its capacity to raise shareholders’ value.
The new unsecured credit facility bears a rate of interest of London Interbank Offered Rate (“Libor”) plus 155–230 basis points (bps). It also includes an accordion feature through which the facility can be increased up to an additional $150 million.
Chatham Lodging Trust mainly invests in premium-branded upscale extended-stay and select-service hotels located in large metropolitan markets of the U.S. The new facility is expected to further solidify the REIT’s financials, and support its strategy to reward its investors.
Chatham Lodging Trust currently carries a Zacks Rank #4 (Sell).
Investors interested in REITs may consider stocks like Arbor Realty Trust Inc. ABR, Getty Realty Corp. GTY and Alexandria Real Estate Equities, Inc. ARE. While both Arbor Realty Trust and Getty Realty sport a Zacks Rank #1 (Strong Buy), Alexandria Real Estate holds a Zacks Rank #2 (Buy).
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