Summit Hotel Properties joint venture enters $400 million term loan agreement

AUSTIN—A joint venture affiliated with Summit Hotel Properties, Inc. (NYSE:INN), a hospitality REIT with a market capitalization of $672 million and annual revenue of $728 million, entered into a $400 million credit facility on Thursday, according to a statement issued in an SEC filing. InvestingPro analysis indicates the stock is currently trading near its Fair Value, with a notable dividend yield of 5.8%. The agreement was signed by Summit JV MR 2, LLC, Summit JV MR 3, LLC, and Summit NCI NOLA BR 184, LLC as borrowers, with Summit Hospitality JV, LP acting as parent. The facility is backed by a group of lenders, with Bank of America, N.A. serving as administrative agent and Wells Fargo (NYSE:WFC) Bank, National Association as syndication agent.

The credit facility consists of a $400 million term loan, with an option to increase the total borrowings up to $600 million through an accordion feature. This new facility adds to Summit’s existing debt load of $1.44 billion, as reported by InvestingPro, which offers comprehensive financial analysis and 10+ additional ProTips for Summit Hotel Properties. The initial maturity date is July 24, 2028, and the borrowers have the option to extend the term for up to two additional twelve-month periods, potentially extending the maturity to July 24, 2030.

Interest on the loan is payable at the end of each selected interest period, at least quarterly, with the outstanding principal and accrued interest due at maturity. Borrowers may repay any portion of the loan without penalty, but amounts repaid cannot be reborrowed. Early principal payments may be required if there are changes to borrowing base asset availability or in case of default.

The interest rate is based on either Daily SOFR or Term SOFR plus a 2.35% margin, or an alternative base rate plus a 1.35% margin, depending on the borrowers’ selection. Additional arrangement and administrative fees also apply.

The facility is primarily secured by a first priority pledge of equity interests in subsidiaries that own the borrowing base assets, which are required to be U.S.-based hotel or parking properties meeting specific criteria. Borrowing base assets can be added or removed, subject to compliance with diversity and concentration requirements.

Key financial covenants include a maximum leverage ratio of 55%, a minimum consolidated tangible net worth of at least $593.9 million plus 75% of net proceeds from future equity issuances, a minimum fixed charge coverage ratio of 1.50:1.00, and a cap on certain secured indebtedness at 40% of total asset value. According to InvestingPro data, Summit’s current ratio stands at 0.25, indicating tight liquidity, while its EBITDA of $227 million demonstrates the company’s operational scale. Access the full Pro Research Report for a detailed analysis of Summit’s financial health and growth prospects.

The information in this article is based on a press release statement contained in a recent SEC filing.

In other recent news, Summit Hotel Properties announced its first-quarter 2025 earnings, which fell short of market expectations. The company reported an earnings per share (EPS) of -$0.04, missing the anticipated -$0.02. Additionally, revenue for the quarter was $184.48 million, slightly below the forecasted $185.37 million. In a separate development, Summit Hotel Properties has filed a prospectus supplement with the SEC concerning the potential offer and sale of up to 12,940,877 shares of common stock by a selling stockholder. These shares are linked to common units of limited partnership of Summit Hotel OP, LP. Holders of these units have the option to redeem their units for cash or exchange them for common stock on a one-for-one basis at the company’s discretion. These developments highlight the company’s recent financial activities and strategic decisions.

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