Apple Hospitality REIT successfully refinanced its primary unsecured credit facility, further enhancing the strength and flexibility of its balance sheet. The Company entered into an amendment and restatement of its existing unsecured $850 million credit facility (the “Credit Facility”) on July 25, 2022, increasing the total Credit Facility to approximately $1.2 billion and extending the Company’s staggered maturity schedule while achieving improved pricing terms across the total Credit Facility.
“We are pleased to further enhance the strength and financial flexibility of our balance sheet and bolster our already strong liquidity position by refinancing our primary Credit Facility,” commented Liz Perkins, Senior Vice President and Chief Financial Officer of Apple Hospitality REIT. “We greatly appreciate the support of our lenders and their continued confidence in our strategy and the underlying fundamentals of our business. Through the credit agreement amendment and restatement, we upsized our revolving credit facility and term loans, providing the Company with greater access to liquidity for strategic growth and the opportunity to further reduce our already conservative secured debt exposure. With the increased size, extended maturities and more attractive pricing of the amended facility, the Company is incredibly well positioned to enhance shareholder value in any macroeconomic environment.”
The Credit Facility is comprised of a term loan of $275 million with a maturity date of July 25, 2027; a term loan of up to $300 million with a maturity date of January 31, 2028, including $150 million available via a delayed draw option until 180 days from closing; and a revolving credit facility of $650 million with an initial maturity date of July 25, 2026, which may be extended up to one year subject to certain conditions. The updates under the total Credit Facility provide for additional capacity of $150 million under the term loans, additional capacity of $225 million under the revolving credit facility, an extension of the maturities of each of the loans under the total facility and improved pricing terms. The credit agreement includes an accordion feature in which the amount of the total Credit Facility may be increased from approximately $1.2 billion to $1.5 billion.
The terms of the amended and restated credit agreement are generally similar to the Company’s previous $850 million credit agreement. The amendment includes: a transition in reference rate from LIBOR to SOFR; a decrease in margin ranging from 1.35% to 2.25% over an adjusted SOFR rate, depending upon the Company’s leverage ratio, as calculated under the terms of the credit agreement; and the same unused fee on the revolving credit facility at a per annum fee of 0.20% or 0.25%, depending on usage.
At closing, the Company borrowed $475 million under the term loans and used the proceeds to repay the $425 million outstanding under the term loans of the previous credit facility and $50 million outstanding under the current revolving credit facility.
The Credit Facility was arranged by BofA Securities, Inc., KeyBanc Capital Markets, Wells Fargo Securities, LLC, and U.S. Bank National Association, as joint lead arrangers and joint bookrunners.