Host Hotels & Resorts Successfully Amends $2.5 Billion Credit Agreement to Enhance Flexibility and Preserve Liquidity and Upd...
June 29 2020 - 4:30PM
Host Hotels & Resorts, Inc. (NYSE: HST), the nation's largest
lodging real estate investment trust (the "Company"), announced
today that it successfully amended the credit agreement governing
its $1.5 billion fully drawn revolving credit facility and two $500
million term loans.
James F. Risoleo, President and Chief Executive
Officer, said, “We obtained favorable waiver terms from our
supportive bank group due to the Company’s superior balance sheet
and liquidity position as well as our disciplined capital
allocation track record. We greatly appreciate the strong,
longstanding partnership demonstrated by our banks and are pleased
to have amended our revolving and term loan credit facilities in a
manner that preserves our liquidity to withstand prolonged business
disruption and enhances our flexibility to capitalize on investment
opportunities that create long-term value for our
stakeholders.”
Key terms of the amended credit agreement
include:
- Waiver of the existing
quarterly-tested financial covenants for the period beginning July
1, 2020 through the second quarter of 2021, with testing resuming
for the third quarter of 2021 (the "Covenant Relief
Period"). The Company also has the option to terminate the
Covenant Relief Period early;
- Modification of the
quarterly-tested leverage covenant and EBITDA calculation to ease
compliance in the first three quarters after the end of the
Covenant Relief Period;
- Permission to finance encumbered or
unencumbered acquisitions of up to $1.5 billion with existing
liquidity as long as the Company maintains total minimum liquidity
of $500 million;
- Ability to fund up to $500 million
in ROI capital expenditures during the Covenant Relief Period as
well as complete capital expenditures incurred in connection with
emergency repairs, life safety repairs or ordinary course
maintenance repairs;
- Addition of a 15-basis points LIBOR
floor for the life of the revolving credit facility and term loans
and an interest rate increase of 40-basis points in the credit
ratings-based interest rate grid during the Covenant Relief Period
for the revolving credit facility and term loans;
- Addition of certain restrictions
and covenants for the duration of the Covenant Relief Period,
including restrictions on dividend and distribution payments
(subject to REIT requirements), share repurchases and new covenants
limiting the incurrence of additional indebtedness, asset sales,
and investments (in each case subject to various
exceptions);
- Maintenance of the revolving credit
facility and one term loan’s initial maturity date of January 2024
with options to extend to January 2025. Maintenance of the second
term loan’s final maturity date of January 2025.
Notably, the Company preserved the fully unsecured status of its
80 consolidated assets and maintained flexibility to sell assets in
connection with like kind exchanges (up to $750 million) as well as
other asset sales up to $350 million before triggering any
mandatory prepayment obligations under the credit facility.
PJT Partners served as independent financial
advisor to the Company on its credit facility amendment.
On June 30th, the Company plans to voluntarily
repay approximately $750 million of borrowings outstanding under
its $1.5 billion fully-drawn revolving credit facility. The Company
will continually monitor its liquidity requirements and evaluate
the need to draw on its revolver capacity.
Updated Investor
Presentation
For additional information on terms of the
amended credit agreement as well as an update on business
performance, including preliminary May top line results, please
refer to the pdf or interactive version of the July 2020 investor
presentation located in the investor section of the Company’s
website.
About Host Hotels &
Resorts
Host Hotels & Resorts, Inc. is an S&P
500 company and is the largest lodging real estate investment trust
and one of the largest owners of luxury and upper-upscale hotels.
The Company currently owns 75 properties in the United States and
five properties internationally totaling approximately 46,700
rooms. The Company also holds non-controlling interests in six
domestic and one international joint ventures. Guided by a
disciplined approach to capital allocation and aggressive asset
management, the Company partners with premium brands such as
Marriott®, Ritz-Carlton®, Westin®, Sheraton®, W®, St. Regis®, The
Luxury Collection®, Hyatt®, Fairmont®, Hilton®, Swissôtel®, ibis®
and Novotel®, as well as independent brands. For additional
information, please visit the Company’s website at
www.hosthotels.com.
* This press release contains registered
trademarks that are the exclusive property of their respective
owners. None of the owners of these trademarks has any
responsibility or liability for any information contained in this
press release.
Note: This press release contains
forward-looking statements within the meaning of federal securities
regulations. These forward-looking statements include forecast
results and are identified by their use of terms and phrases such
as “anticipate,” “believe,” “could,” “estimate,” “expect,”
“intend,” “may,” “should,” “plan,” “predict,” “project,” “will,”
“continue” and other similar terms and phrases, including
references to assumptions and forecasts of future results.
Forward-looking statements are not guarantees of future performance
and involve known and unknown risks, uncertainties and other
factors which may cause the actual results to differ materially
from those anticipated at the time the forward-looking statements
are made. These risks include, but are not limited to: the duration
and scope of the COVID-19 pandemic and its short and longer-term
impact on the demand for travel, transient and group business, and
levels of consumer confidence; actions governments, businesses and
individuals take in response to the pandemic, including limiting or
banning travel; the impact of the pandemic and actions taken in
response to the pandemic on global and regional economies, travel,
and economic activity, including the duration and magnitude of its
impact on unemployment rates, business investment and consumer
discretionary spending; the pace of recovery when the COVID-19
pandemic subsides; general economic uncertainty in U.S. markets
where we own hotels and a worsening of economic conditions or low
levels of economic growth in these markets; the effects of steps we
and our hotel managers take to reduce operating costs in response
to the COVID-19 pandemic; other changes (apart from the COVID-19
pandemic) in national and local economic and business conditions
and other factors such as natural disasters and weather that will
affect occupancy rates at our hotels and the demand for hotel
products and services; the impact of geopolitical developments
outside the U.S. on lodging demand; volatility in global financial
and credit markets; operating risks associated with the hotel
business; risks and limitations in our operating flexibility
associated with the level of our indebtedness and our ability to
meet covenants in our debt agreements; risks associated with our
relationships with property managers and joint venture partners;
our ability to maintain our properties in a first-class manner,
including meeting capital expenditure requirements; the effects of
hotel renovations on our hotel occupancy and financial results; our
ability to compete effectively in areas such as access, location,
quality of accommodations and room rate structures; risks
associated with our ability to complete acquisitions and
dispositions and develop new properties and the risks that
acquisitions and new developments may not perform in accordance
with our expectations; our ability to continue to satisfy complex
rules in order for us to remain a REIT for federal income tax
purposes; risks associated with our ability to effectuate our
dividend policy, including factors such as operating results and
the economic outlook influencing our board’s decision whether to
pay further dividends at levels previously disclosed or to use
available cash to make special dividends; and other risks and
uncertainties associated with our business described in the
Company’s annual report on Form 10-K, quarterly reports on Form
10-Q and current reports on Form 8-K filed with the SEC. Although
the Company believes the expectations reflected in such
forward-looking statements are based upon reasonable assumptions,
it can give no assurance that the expectations will be attained or
that any deviation will not be material. All information in this
release is as of June 29, 2020 and the Company undertakes no
obligation to update any forward-looking statement to conform the
statement to actual results or changes in the Company’s
expectations.
Tejal EngmanVice President240.744.5116
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