Ryman Hospitality Properties upgraded to ’BB-’ with stable outlook by S&P Global Ratings

Investing.com -- S&P Global Ratings has upgraded its issuer credit rating for Ryman Hospitality Properties (NYSE:RHP) Inc., a U.S. lodging REIT, to ’BB-’ from ’B+’. This follows Ryman’s continued asset diversification and resilience in group travel. The rating agency also assigned a ’BB’ issue-level rating to Ryman’s proposed $600 million unsecured notes due 2033.

Ryman recently announced its plans to acquire the JW Marriott Desert Ridge hotel in Phoenix for $865 million. The acquisition will be funded through the issuance of $600 million of eight-year senior unsecured notes, $250 million of equity, and $15 million of unrestricted cash on hand. The Desert Ridge hotel is expected to provide Ryman with brand, geographic, and some seasonal diversity as its strongest results occur in the first quarter.

Following the acquisition and the planned debt and equity capitalization mix, S&P Global Ratings expects Ryman’s lease and put adjusted net debt to EBITDA to be around 5.0x in 2025, improving to below 5.0x in 2026. EBITDA coverage of interest expense is expected to be in the mid-3x area through 2026.

Ryman has been focusing on strengthening its portfolio of resorts aimed at large groups and conventions. The company has increased its rooms base from 9,917 to approximately 12,500 rooms through acquisitions and select renovations since 2022. The addition of the Desert Ridge hotel, which generated a total RevPAR of $595 in 2024, is expected to further enhance Ryman’s portfolio.

Ryman is currently undergoing a $1 billion capex cycle that started in 2023, investing heavily in room renovations and adding meeting spaces at its properties. The company is expected to see a decline in capex to around $200 million-$250 million in 2026, from its budget of $400 million-$450 million in 2025, as significant renovations at some of its properties are completed.

Despite potential macroeconomic headwinds over the next year, S&P Global Ratings is comfortable with the ’BB-’ rating for Ryman, due to the company’s visibility in its forward group bookings. The stable outlook also reflects Ryman’s long-term financial target to sustain its measure of net leverage of 4.0x-4.5x.

Ryman reported strong operating performance in the first quarter of 2025, with RevPAR and total RevPAR up 10.2% and 9.1% respectively. However, the company has revised its guidance for RevPAR and total RevPAR down due to macroeconomic uncertainty and a potential slowdown in group business.

The upgrade by S&P Global Ratings reflects the belief that recent acquisitions and renovation investments have strengthened Ryman’s hotel portfolio and its EBITDA coverage of interest expense will remain in the mid-3x area through 2026.

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