Sunstone Hotel Investors, Inc. has recently completed a significant financial restructuring with an amended and restated credit agreement totaling $1.35 billion. The company's CEO, Bryan A. Giglia, emphasized that the new credit facilities address all maturities through 2028 and extend the average maturity by over three years. Additionally, the restructuring has lowered the company's overall cost of borrowing.
The Amended Credit Agreement comprises a $500 million revolving credit facility with an initial maturity in September 2029, a $275 million delayed-draw term loan facility with an initial maturity in January 2029, a $275 million term loan facility with an initial maturity in January 2030, and a $300 million term loan facility due in January 2031. The company also has the option to extend the revolving credit facility to September 2030 and the $275 million term loan facilities to January 2031.
As a part of the restructuring, Sunstone Hotel Investors has entered into interest rate swaps to lower its borrowing costs and manage interest rate risk, resulting in over 75% of its debt and preferred equity now being subject to fixed rates. The company utilized the proceeds from the incremental borrowing on the new term loans to consolidate its prior four term loans into three loans and fully repay the outstanding balance on its revolving credit facility.
Following this repayment, the company will not have any debt maturities until 2028. The company's unsecured credit facilities are led by several major financial institutions, with Wells Fargo Bank, National Association, serving as the Administrative Agent.
The restructuring aims to provide improved financial flexibility for the company to execute its strategy while maximizing shareholder value. Sunstone Hotel Investors, Inc. is a lodging real estate investment trust (“REIT”) with a strategy to create long-term stakeholder value through the acquisition, active ownership, and disposition of well-located hotel and resort real estate. Following these announcements, the company's shares moved 1.9%, and are now trading at a price of $9.64. If you want to know more, read the company's complete 8-K report here.
