DALLAS- FelCor Lodging Trust Inc. has obtained a $212-million floating-rate loan for a nine-hotel portfolio with roughly 2,500 rooms. The REIT made the announcement during its first quarter earnings call.
Loan proceeds were used to repay six mortgage loans totaling $210 million that were secured by 11 hotels and scheduled to mature this month. The REIT also used the proceeds to unencumber two hotels.
The new loan, which was arranged by Cushman & Wakefield Sonnenblick Goldman’s Global Hospitality Group (CSWG), matures in 2015. CWSG professionals Mark Gordon, Jared Kelso, Alison Tan and Ernest Lee represented FelCor in arranging the financing.
"The portfolio of five Embassy Suites and four Sheraton hotels generated strong interest from the lending community as a result of FelCor’s exceptional sponsorship, the geographic diversity of the assets, the strong quality of the assets and CWSG’s aggressive marketing process," Gordon says.
The new loan bears interest at LIBOR (subject to a 3% floor) plus 5.1%. With this financing, FelCor Lodging has resolved all of its remaining 2010 debt maturities on terms that are significantly more favorable than the debt it refinanced.
Two remaining loans totaling $32 million mature in May 2010. The cash flows for the hotels that secure those loans do not cover debt service, and the REIT stopped funding the shortfalls in December 2009.
The REIT says it has been unable to negotiate an acceptable debt modification or reduction that made sense for its stockholders with regard to those loans. As a result, these two hotels will go back to their lenders.
"We are very pleased with the successful refinancing of our near-term debt maturities,” says FelCor's Executive Vice President and CFO Andrew J. Welch. “Our efforts are complete, as we have now resolved all of our remaining 2010 maturities. The most recent refinancing improves our balance sheet by lowering our average interest rate and providing us with two additional unencumbered hotels. We will continue to look for additional opportunities to strengthen our balance sheet as the capital markets improve.”
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