Sunstone Hotel Investors, Inc. has successfully completed a $1.35 billion Amended and Restated Credit Agreement, as announced in a recent press release. The agreement aims to address near-term maturities, extend the duration of existing loans, and bolster the company's balance sheet.
Key components of the Amended Credit Agreement include 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 January 2031. The company has the option to extend the revolving credit facility to September 2030 and each of the $275 million term loan facilities to January 2031.
In conjunction with the new facilities, the company has entered into interest rate swaps to mitigate borrowing costs and manage interest rate risk, resulting in over 75% of its debt and preferred equity being subject to fixed rates.
Proceeds from the incremental borrowing on the new term loans were utilized to consolidate the company's previous four term loans into three loans and fully repay the outstanding balance on its revolving credit facility. Additionally, the company plans to delay the draw of up to $90 million under the delayed-draw term loan facility until January 2026, with the majority of the proceeds expected to be used to repay the Series A Senior Notes at their scheduled maturity.
This move has effectively pushed the company's debt maturities back to 2028, providing improved financial flexibility to execute its strategy and maximize shareholder value.
The Amended Credit Agreement was led jointly by several financial institutions, with Wells Fargo Bank, National Association, serving as the Administrative Agent. The Joint Bookrunners were Wells Fargo Securities, LLC, BofA Securities, Inc., and JPMorgan Chase Bank, N.A., with Bank of America, N.A., and JPMorgan Chase Bank, N.A., acting as Syndication Agents, and Capital One, National Association, and Manufacturers and Traders Trust Company, as Documentation Agents.
This move is in line with Sunstone Hotel Investors' strategy as a lodging real estate investment trust ("REIT") 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. For more information, read the company's full 8-K submission here.
