PHILADELPHIA Hersha Hospitality Trust announces commitments to borrow up to US$250 million under a secured credit facility.
The line of credit, which replaces the REIT’s existing US$135 million credit facility will be used to continue executing its strategy of acquiring high-quality hotel properties in key urban gateway markets.
TD Bank NA and TD Securities (USA) LLC are funding a senior secured revolving credit facility of US$225 million, which matures in three years with an extension option for an additional year that could raise the total to US$250 million.
Borrowings will bear interest at a rate determined by a leverage-based pricing grid. LIBOR loans will bear interest at LIBOR plus an applicable margin of either 350 or 375 basis points per year, subject to a LIBOR floor of 75 basis points per year. Hersha expects that other terms, conditions and covenants of the new credit facility will be generally consistent with the terms of its existing credit facility.
“We believe the ability to materially increase our financial flexibility with this increased revolving credit facility is testament to the progress we have made over the years to position our portfolio in some of the strongest lodging markets in the country and to the increased cash flow our hotels are able to generate,” says Hersha CEO Jay Shah. “This secured line of credit will help us continue to execute on our strategy of acquiring high-quality hotel properties in key urban gateway markets, which in our experience have historically led economic recoveries.”
The company expects to close on the revolving credit facility during the fourth quarter, subject to satisfaction of customary closing conditions and the negotiation and execution of definitive loan documents.
Hersha Hospitality Trust is a self-advised REIT that owns interests in 76 hotels, totaling 10,071 guestrooms, primarily along the U.S. Northeast corridor from Boston to Washington, D.C. Hersha also owns hotels in northern California and Scottsdale, Arizona. Hersha focuses on upscale, mid-scale and extended stay hotels in major metropolitan markets.