NEW YORK, May 1, 2017 — Hospitality Investors Trust, Inc ("HIT REIT" or the "Company") announced today that it has successfully refinanced two loans and, simultaneously, completed the acquisition of seven hotels pursuant to its previously announced purchase agreement with Summit Hotel Properties, Inc. ("Summit") (the "Summit Portfolio").
The new loans, which total approximately $1.225 billion, each carry a two-year initial term with three one-year extension options subject to conditions, and consist of:
(i) A mortgage loan and related mezzanine loans with an aggregate principal balance of $915.0 million, which are collateralized by 87 of the Company's hotel properties (the "HIT REIT Mortgage Loan") and;
(ii) A term loan with a principal balance of $310.0 million, which is collateralized by 28 of the Company's hotel properties (the "HIT REIT Term Loan").
Citibank, N.A. acted as administrative agent and as collateral agent, and Citigroup and Deutsche Bank acted as joint lead arrangers for the HIT REIT Term Loan. JPMorgan Chase Bank, National Association was also an initial lender for the HIT REIT Term Loan.
The seven hotels in the Summit Portfolio consist of 651 keys and were acquired for an aggregate purchase price of $66.8 million. All the properties in the portfolio have long term franchise agreements with one of the following brands: Marriott International (Courtyard, Residence Inn and Fairfield Inn), Hilton Hotels (Homewood Suites) or IHG (Staybridge Suites). The properties are located in Germantown, Tennessee and Ridgeland, Mississippi. The transaction increases the Company's lodging portfolio to 148 hotels totaling 17,844 keys across 33 states.
Net proceeds (following the payment of fees and expenses) from the HIT REIT Mortgage Loan were used by HIT REIT to refinance the EQTY 2014-INNS loan, which, as of March 31, 2017, had an aggregate principal balance of $895.4 million, was collateralized by 95 of the Company's hotel properties, and had a final maturity date of May 2019.
Net proceeds (following the payment of fees and expenses) from the HIT REIT Term Loan were used by HIT REIT for the following purposes:
(i) To refinance its previous term loan, which, as of March 31, 2017, had an outstanding principal balance of $235.5 million, was collateralized by 20 of the Company's hotel properties, and had a maturity date of August 2020;
(ii) To finance a portion of the purchase price of the Summit Portfolio and;
(iii) To fund reserves for contractual Property Improvement Plans associated with certain hotels collateralized by the HIT REIT Mortgage Loan.
Jonathan P. Mehlman, President and Chief Executive Officer of HIT REIT, commented, "We are pleased to announce these refinancing initiatives, which we believe enhance our capital structure by affording us a meaningful reduction of our cost of capital as well as the extension of maturities until 2022 on a significant portion of our mortgage debt. In addition, we are pleased to close on this portfolio of seven premium-branded select-service hotels from Summit."
Additional details regarding these refinancings and the Summit Portfolio acquisition will be available in the Company's Form 8-K to be filed with the Securities and Exchange Commission by May 3, 2017.
Cleary Gottlieb Steen & Hamilton LLP acted as legal advisor to HIT REIT. Cadwalader, Wickersham & Taft LLP and Shearman & Sterling LLP acted as legal advisors to the lenders on the HIT REIT Mortgage Loan and HIT REIT Term Loan, respectively. Proskauer Rose LLP acted as counsel to HIT REIT in connection with the acquisition of the Summit Portfolio.
