Summit Hotel Properties secures $275 million loan facility

Summit Hotel Properties, Inc. (NYSE:INN), a publicly traded real estate investment trust currently valued at $689.54 million, has entered into a $275 million unsecured delayed draw term loan facility, according to a recent 8-K filing with the Securities and Exchange Commission. According to InvestingPro analysis, the company appears to be trading near its Fair Value, with multiple favorable valuation metrics including attractive EBITDA and revenue multiples. The agreement, dated March 27, 2025, involves various lenders, including Bank of America, N.A., which serves as the administrative agent.

The facility, which Summit Hotel Properties can draw upon until March 1, 2026, is intended for refinancing existing indebtedness and general working capital purposes. With total debt standing at $1.42 billion and a debt-to-equity ratio of 1.56, this refinancing move could be crucial for the company’s capital structure. It includes an accordion feature allowing for an additional $50 million in delayed draw commitments. The maturity date is set for March 27, 2028, with two twelve-month extension options, potentially extending the maturity to March 27, 2030.

Interest rates on the term loan will vary based on the company’s leverage ratio and can be calculated using either the Daily or Term SOFR plus a margin, or a base rate determined by the highest of the prime rate, federal funds rate plus 0.50%, or 1-month Term SOFR plus 1.00%, plus an additional margin. Summit Hotel Properties is also subject to quarterly fees on the unused portion of the facility and other customary fees.

The facility mandates adherence to several financial and operational covenants, including maximum leverage ratios, minimum fixed charge coverage ratios, and limitations on secured debt. These covenants are designed to maintain the company’s financial stability and operational flexibility.

This strategic financial move by Summit Hotel Properties aims to strengthen its capital structure and support its ongoing operations, which generated $731.78 million in revenue over the last twelve months. InvestingPro data shows the company maintains a FAIR financial health score of 2.46, with 10 additional key insights available to subscribers. The information disclosed in this article is based on statements from a press release and enhanced with comprehensive financial analysis from InvestingPro’s detailed research reports, available for over 1,400 US stocks.

In other recent news, Summit Hotel Properties reported its fourth-quarter 2024 earnings, showing a robust financial performance. The company achieved an earnings per share of $0.01, surpassing the anticipated loss of $0.08. Revenue also exceeded expectations, coming in at $172.93 million compared to the forecasted $171.04 million. Summit Hotel Properties demonstrated effective cost management, maintaining flat hotel EBITDA margins despite a modest RevPAR growth of 1.8% for the year. The adjusted funds from operations increased to $119.2 million, marking nearly a 6% rise from the previous year. In terms of acquisitions, the company purchased the Hampton Inn Boston Logan Airport and Hilton Garden Inn Tysons Corner for $96 million through its joint venture with GIC. Analyst firms, such as KeyBanc Capital Markets, engaged with Summit’s management regarding future revenue expectations and strategic capital allocations. The company anticipates RevPAR growth of 1-3% and an adjusted EBITDA range of $184 million to $198 million for 2025.

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