DiamondRock Hospitality Company (NYSE:DRH) Files An 8-K Entry into a Material Definitive Agreement
ITEM 1.01. Entry into a Material Definitive Agreement.
On April26, 2017, the DiamondRock Hospitality Company (the
Company) entered into a Term Loan Agreement (the Term Loan
Agreement) among the Company, DiamondRock Hospitality Limited
Partnership, Regions Bank, Regions Capital Markets, KeyBank
National Association, PNC Bank, National Association, U.S. Bank
National Association and certain other lenders named therein. The
Term Loan Agreement provides for a new $200 million unsecured
term loan maturing on April25, 2022 (the Term Loan). Any
principal amounts are due and payable upon maturity of the Term
Loan. The Term Loan may be paid prior to maturity in whole or in
part at the Companys option without penalty or premium. The
Companys operating partnership, DiamondRock Hospitality Limited
Partnership, is the borrower under the Term Loan Agreement and
certain of the Companys material subsidiaries guarantee its
obligations under the Term Loan Agreement.
The Company used a portion of the proceeds from the Term Loan to
repay the $170.4 million mortgage loan secured by the Lexington
Hotel New York.
Interest is paid on the borrowings under the Term Loan Agreement
at varying rates, based upon LIBOR plus an applicable margin. The
applicable margin is based upon the Companys leverage ratio, as
follows:
|
Level |
|
RatioofNetIndebtednesstoEBITDA |
|
Applicable Margin |
|
|
Less than or equal to 35% |
1.45% |
||
|
|
Greater than 35% but less than or equal to 45% |
1.60% |
||
|
|
Greater than 45% but less than or equal to 50% |
1.75% |
||
|
|
Greater than 50% but less than or equal to 55% |
1.95% |
||
|
|
Greater than 55% |
2.20% |
As of May1, 2017, the applicable interest rate under the Term
Loan is LIBOR plus 1.45%.
The Term Loan Agreement contains various corporate financial
covenants. A summary of the most restrictive covenants is as
follows:
|
|
Covenant |
|
Actual |
|
|
Maximum leverage ratio |
60% |
25.1% |
||
|
Minimum fixed charge coverage ratio |
1.50x |
4.65x |
||
|
Minimum tangible net worth |
$1.913 billion |
$2.612 billion |
||
|
Secured Indebtedness |
Less than 45% of Total Asset Value |
26.7% |
The Term Loan Agreement requires the Company to maintain a
specific pool of unencumbered properties. The unencumbered
properties must be a minimum of eight properties with a value, as
defined, of not less than $750 million.
The Term Loan Agreement contains representations, financial and
other affirmative and negative covenants, events of default, and
remedies typical for this type of term loan and which match in
all material respects the comparable terms of the agreement
governing the Companys senior unsecured credit facility and the
agreement governing the Companys $100 million unsecured term
loan. In connection with the Term Loan, the Company entered into
non-material amendments to these agreements. Any failure to
comply with the financial and operating covenants of the Term
Loan Agreement would constitute a default, which could result in,
among other things, the amounts outstanding, including all
accrued interest and unpaid fees, becoming immediately due and
payable.
The foregoing description of the Term Loan Agreement does not
purport to be complete and is qualified in its entirety by the
full terms and conditions of the Term Loan Agreement which is
filed as Exhibit10.1 to this Current Report on Form8-K (this
Current Report) and incorporated herein by reference.
ITEM 2.03. Creation Of A Direct Financial Obligation Or
An Obligation Under An Off-Balance Sheet Arrangement Of A
Registrant.
The information set forth under Item 1.01 of this Current
Report is hereby incorporated by reference into this Item 2.03.
ITEM 9.01. Financial Statements and Exhibits.
(d) Exhibits.
See Index to Exhibits attached hereto.
About DiamondRock Hospitality Company (NYSE:DRH)
DiamondRock Hospitality Company is a lodging-focused Maryland corporation operating as a real estate investment trust (REIT). The Company owns a portfolio of approximately 30 hotels and resorts throughout North America and the United States Virgin Islands that consists of over 10,925 guest rooms. Its primary business is to acquire, own, asset manage and renovate full-service hotel properties in the United States. Its portfolio is concentrated in gateway cities and destination resort locations. The Company conducts its business through an umbrella partnership REIT (UPREIT) in which the Company’s hotels are owned by subsidiaries of its operating partnership, DiamondRock Hospitality Limited Partnership. The Company is the sole general partner of its operating partnership and owns either directly or indirectly, all of the limited partnership units of its operating partnership. DiamondRock Hospitality Company (NYSE:DRH) Recent Trading Information
DiamondRock Hospitality Company (NYSE:DRH) closed its last trading session up +0.17 at 11.18 with 2,824,569 shares trading hands.
