Sunstone Hotel Investors, Inc. (NYSE:SHO) Files An 8-K Entry into a Material Definitive Agreement
Item 1.01.ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.
On December 20, 2016, Sunstone Hotels Investors, Inc. (the
Company) and Sunstone Hotel Partnership, LLC (the Operating
Partnership) entered into a Note and Guarantee Agreement (the
Note Agreement) with the various purchasers named therein (the
Purchasers) which provides for the private placement of $240
million of senior unsecured notes of the Operating Partnership,
of which (i) $120 million are designated as 4.69% Series A
Guaranteed Senior Notes due January 10, 2026 (the Series A Notes)
and (ii) $120 million are designated as 4.79% Series B Guaranteed
Senior Notes due January 10, 2028 (the Series B Notes and,
together with the Series A Notes, the Notes). The issuance and
sale of the Notes is expected to occur at closing on January 10,
2017, subject to customary closing conditions (the Private
Placement). Obligations under the Notes will be unconditionally
guaranteed by the Company.
Upon issuance, the Notes will pay interest semiannually on the
tenth day of January and July in each year until maturity. The
Operating Partnership may prepay at any time all, or from time to
time any part of, either series of the Notes, in an amount not
less than 5% of the aggregate principal amount of the Notes then
outstanding in the case of a partial prepayment, at 50% of the
principal amount so prepaid plus a make-whole amount. The
make-whole amount is equal to the excess, if any, of the
discounted value of the remaining scheduled payments with respect
to the Notes being prepaid over the aggregate principal amount of
such Notes (as more particularly described in the Note
Agreement).
The Note Agreement contains a number of customary financial
covenants, including a maximum leverage ratio, a minimum fixed
charge coverage ratio, secured and unsecured leverage ratios, a
minimum debt service coverage ratio and a minimum unencumbered
property requirement. The Note Agreement also contains
representations, warranties, covenants, terms and conditions
customary for transactions of this type, including limitations on
liens, incurrence of debt, investments, mergers and asset
dispositions, covenants to preserve corporate existence and
comply with laws and default provisions, including defaults for
non-payment, breach of representations and warranties,
insolvency, non-performance of covenants, cross-defaults and
guarantor defaults. The occurrence of an event of default under
the Note Agreement could result in the Purchasers accelerating
the payment of all obligations under the Notes. These financial
and restrictive covenants and default provisions are
substantially similar to those contained in the Companys existing
credit facility.
Net proceeds from the Private Placement will be used for the
repayment of existing secured indebtedness, consisting of the
mortgage loan secured by the Embassy Suites Chicago and the
mortgage loan secured by the Marriott Boston Long Wharf. The
Notes have not been and will not be registered under the
Securities Act of 1933, as amended (the Securities Act), and may
not be offered or sold in the United States absent registration
or an applicable exemption from the registration requirements of
the Securities Act. At closing of the Private Placement, the
Operating Partnership will issue and sell the Notes in reliance
on the exemption from registration provided by Section 4(a)(2) of
the Securities Act.
The above summary of the Note Agreement does not purport to be
complete and is qualified in its entirety by reference to the
full text of the Note Agreement. The Company will file a copy of
the Note Agreement, including the forms of the Notes, as an
exhibit to the Companys Annual Report on Form 10-K for the year
ending December 31, 2016.
Item 2.03. CREATION OF A DIRECT FINANCIAL OBLIGATION OR AN
OGLIBATION UNDER AN OFF-BALANCE SHEET ARRANGEMENT OF A
REGISTRANT.
The information set forth under Item 1.01 Entry into a Material
Definitive Agreement is incorporated herein by reference into
this Item 2.03.
Item 7.01. REGULATION FD DISCLOSURE.
On December 20, 2016, the Company issued a press release
announcing the entry into the Note Agreement described above. A
copy of that press release is furnished as Exhibit 99.1 to this
Current Report on Form 8-K and is incorporated herein by
reference.
The information furnished under Item 7.01 and in Exhibit 99.1
attached hereto shall not be deemed filed for purposes of
Section 18 of the Securities Exchange Act of 1934, as amended
(the Exchange Act), or otherwise subject to the liabilities
under that Section, and shall not be deemed to be incorporated
by reference into any filing of the Company under the
Securities Act of 1933, as amended, or the Exchange Act,
regardless of any general incorporation language in such
filing.
This Current Report on Form 8-K contains statements that are
forward-looking statements within the meaning of Section 27A of
the Securities Act of 1933, as amended, and Section 21E of the
Securities Act of 1934, as amended, to the safe harbor
provisions of the Private Securities Reform Act of 1995. These
forward-looking statements relate to the closing of the Private
Placement and the use of proceeds from the transaction.
Forward-looking statements are based on certain assumptions and
can include future expectations, future plans and strategies,
financial and operating projections or other forward-looking
information.
These forward-looking statements are subject to various risks
and uncertainties, not all of which are known to the Company
and many of which are beyond the Companys control, which could
cause actual results to differ materially from such statements.
These risks and uncertainties include, but are not limited to,
the state of the U.S. economy, supply and demand in the hotel
industry and other factors as are described in greater detail
in the Companys filings with the Securities and Exchange
Commission, including, without limitation, the Companys Annual
Report on Form 10-K for the year ended December 31, 2015.
Unless legally required, the Company disclaims any obligation
to update any forward-looking statements, whether as a result
of new information, future events or otherwise.
Item 9.01.FINANCIAL STATEMENT AND EXHIBITS.
(d)The following exhibits are furnished herewith:
EXHIBIT INDEX
|
ExhibitNo. |
Description |
|
99.1 |
Press Release, dated December 20, 2016. |
About Sunstone Hotel Investors, Inc. (NYSE:SHO)
Sunstone Hotel Investors, Inc. is a self-managed and self-administered real estate investment trust (REIT). The Company’s business is to acquire, own, asset manage and renovate full-service hotel and select focus-service hotel properties in the United States. The Company operates through hotel ownership segment. It has interests in approximately 30 hotels, which include approximately 13,640 rooms. Its hotels operate under the brands, including Marriott, Hilton, Hyatt and Fairmont. Its portfolio primarily consists of urban, upper upscale hotels in the United States. Its hotels include Boston Park Plaza, Courtyard by Marriott Los Angeles, Embassy Suites Chicago, Fairmont Newport Beach, Hilton North Houston, Hilton Times Square, Hyatt Regency Newport Beach, Hyatt Regency San Francisco and Marriott Houston. Sunstone Hotel Investors, Inc. (NYSE:SHO) Recent Trading Information
Sunstone Hotel Investors, Inc. (NYSE:SHO) closed its last trading session down -0.08 at 15.83 with 2,099,506 shares trading hands.
