Apple Hospitality REIT has refinanced its primary unsecured credit facility, increasing its total credit facility from $850 million to $1.2 billion.
In a news release, the hotel real estate investment trust stated refinancing extends the company’s staggered maturity schedule and achieves improved pricing terms across its credit facility.
“We are pleased to further enhance the strength and financial flexibility of our balance sheet and bolster our already strong liquidity position by refinancing our primary credit facility,” said Liz Perkins, senior vice president and chief financial officer in the release.
The refinancing has increased the size of its revolving credit facility and term loans, providing the company with greater access to liquidity for strategic growth and the opportunity to reduce its secured debt exposure.
In a video interview with HNN at the 2022 NYU International Hospitality Investment Conference, Apple REIT CEO Justin Knight said his company entered the pandemic with a strong balance sheet and was uniquely positioned to pursue hotel deals.
"The deals that we've been able to acquire are meaningfully additive in that they tend to be newer assets with lower [capital expenditure] needs and positioned in markets that have been early beneficiaries of the recovery," he said.
Within the past year, Apple acquired a three-hotel portfolio that included the 157-room Hilton Garden Inn Fort Worth Medical Center, the 112-room Homewood Suites by Hilton Fort Worth Medical Center and the 243-room Hampton Inn & Suites by Hilton Portland Pearl District for a total price of $126 million.
It also purchased the 157-room Aloft Hotel in downtown Portland, Maine, for $51.2 million; the 130-room Hyatt Place in downtown Greenville, South Carolina, for $30 million; and the 178-room AC Hotel by Marriott in Portland for $66.8 million.
Apple REIT’s new credit facility includes a term loan of $275 million with a maturity date of July 25, 2027, as well as a term loan of up to $300 million with a maturity date of Jan. 31, 2028, that has $150 million available through a delayed draw option until 180 days from closing. It also has a revolving credit facility of $650 million with an initial maturity date of July 25, 2026, that can be extended up to one year under certain conditions.
The new agreement also includes an accordion feature that allows the amount of the total credit facility to increase from approximately $1.2 billion to $1.5 billion.
In its closing, Apple borrowed $475 million under the term loans and used the proceeds to repay the $245 million outstanding in its previous credit facility and $50 million outstanding in its current revolving credit facility.
BofA Securities, KeyBanc Capital Markets, Wells Fargo Securities and U.S. Bank National Association, as joint lead arrangers and joint bookrunners, arranged the new credit facility.