Strategic Hotels & Resorts, Inc. announced that it has closed a new $300 million stock secured credit facility with an accordion feature allowing for additional borrowing capacity up to $400.0 million. The new facility replaces a $300 million mortgage secured revolving credit facility set to mature, assuming all extension options were exercised, in June 2015. The facility's interest rate is based upon a leverage-based pricing grid ranging from LIBOR plus 175 basis points to LIBOR plus 250 basis points. Initial pricing will be LIBOR plus 200 basis points, which is a reduction from the previous facility's pricing of LIBOR plus 275 basis points. The facility has a four-year term with a one-year extension available to the company.
The facility is secured by an equity pledge in direct and indirect subsidiaries that own, lease or operate five of the company's assets: the Four Seasons Jackson Hole, Four Seasons Silicon Valley, Marriott Lincolnshire, Ritz-Carlton Half Moon Bay and Ritz-Carlton Laguna Niguel hotels.
Deutsche Bank Securities Inc. and JP Morgan Securities LLC served as Joint Lead Arrangers and Joint Book Running Managers for the facility. Deutsche Bank AG New York Branch and JP Morgan Chase Bank, N.A. served as Administrative Agent and Syndication Agent, respectively. Bank of America, N.A.; BMO Harris Bank, N.A.; Capital One Bank, N.A.; Sumitomo Mitsui Banking Corporation; and Wells Fargo Bank, National Association served as Co-Documentation agents. MidFirst Bank; PNC Bank; Raymond James Bank, N.A.; and The PrivateBank are additional participating banks.
Additionally, the company paid $22.7 million to terminate its remaining $400 million notional value interest rate swap portfolio with maturity dates ranging from September 2014 through February 2016, which will save approximately $11.5 million in 2014 cash interest expense. The swap portfolio had a weighted average LIBOR strike rate of 5.09 percent.
Strategic Hotels & Resorts, Inc. is a real estate investment trust (REIT) which owns and provides value enhancing asset management of high-end hotels and resorts in the United States and Europe. The company currently has ownership interests in 16 properties with an aggregate of 7,862 rooms and 835,000 square feet of multi-purpose meeting and banqueting space.