Materially Reduces Financial Covenants
Improves Access to Liquidity
SAN CLEMENTE, Calif., June 29 /PRNewswire-FirstCall/ -- Sunstone Hotel Investors, Inc. (NYSE: SHO) announced today that it has amended its revolving credit facility. The amendment reduces the facility's minimum fixed charge coverage covenant from 1.50:1.00 to 1.00:1.00, with added flexibility to drop to 0.90:1.00 for up to four quarters. Additionally, the amendment eliminates the facility's 65% maximum total leverage covenant and replaces it with a 9.50:1.00 maximum net debt to EBITDA covenant, which may be increased to 10.50:1.00 for up to four quarters. The facility's size was reduced from $200 million to $85 million. There are currently no borrowings outstanding on the facility, and $3.5 million of secured letters of credit associated with the facility.
The facility, subject to certain terms and conditions, is secured by five of the company's hotels: the Fairmont Newport Beach, Hyatt Regency Newport Beach, Renaissance LAX, Residence Inn Rochester Mayo Clinic and the Sheraton Cerritos. The facility matures in 2012, assuming the exercise of a one-year extension option. The interest rate on the facility is based on grid pricing ranging from 375 - 525 basis points over LIBOR.
The facility is led by Citicorp North America, Inc. and Wachovia Bank, NA as Joint Lead Arrangers and Joint Book Running Managers. Other lenders in the facility include Calyon, Keybank NA, Bank of America, JP Morgan, Deutsche Bank, Merrill Lynch, and UBS AG.
'Our ability to materially improve the terms of our credit facility in the context of a very challenging credit environment speaks to the quality of Sunstone's lender relationships. We believe that the completion of this amendment, combined with our recent exchangeable notes repurchases, common stock offering, non-core asset sales and secured debt management initiatives will enable Sunstone to emerge from the current down cycle in a position of strength,' said Ken Cruse, Chief Financial Officer.
About Sunstone Hotel Investors, Inc.
Sunstone Hotel Investors, Inc. is a lodging real estate investment trust ('REIT') that, as of the date hereof, has interests in 42 hotels comprised of 14,463 rooms primarily in the upper-upscale segment operated under nationally recognized brands, such as Marriott, Hilton, Hyatt, Fairmont and Starwood.
