In an effort to reduce its interest costs and extend its debt
DiamondRock Hospitality Co.
), a real estate investment trust (REIT), recently closed on a
$74 million loan financing secured by its Westin Washington
D.C. City Center hotel. The 10-year loan carries a fixed interest
rate of 3.99%. With this transaction, of the 27 hotels owned by
DiamondRock, 15 remain unencumbered by property-specific mortgage
The proceeds from the loan will be utilized to repay outstanding
debts on the company's credit facility. DiamondRock expects to
have approximately $20 million outstanding debt under its $200
million senior unsecured credit facility by the end of 2012.
The strategic move is aimed to significantly reduce its
borrowings under its credit facility, lower its interest
burden, and capitalize on further growth opportunities. As of
September 7, 2012, the company had $21.6 million of unrestricted
cash on hand and approximately $1.0 billion of total debt.
DiamondRock is an owner of premium hotel properties. The company
acquires and invests in upscale hotels under the Hilton, Marriot
and Westin brands across the U.S. The company reported adjusted
FFO (funds from operations) of 18 cents per share in the third
quarter of 2012, missing the Zacks Consensus Estimate by a penny.
Currently, the company owns 27 premium hotels with approximately
DiamondRock currently retains a Zacks #3 Rank, which translates
into a short-term Hold rating. We have a long-term Neutral
recommendation on the stock. One of its competitors,
Ashford Hospitality Trust Inc
) holds a Zacks #3 Rank, which translates into a short term Hold
Note: Fund from operations, a widely used metric to gauge the
performance of REITs, is obtained after adding depreciation and
amortization and other non-cash expenses to net income.
ASHFORD HOSPTLY (AHT): Free Stock Analysis
DIAMONDROCK HOS (DRH): Free Stock Analysis
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