In order to attain ample flexibility and liquidity, Bethesda,
Maryland-based real estate investment trust (REIT),
RLJ Lodging Trust
), has announced the completion of an unsecured credit facility
worth $700 million. The facility, expandable to up to $1.2
billion, consists of a five-year and seven-year term loan worth
$400 million and a revolving credit facility worth $300 million.
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RLJ LODGING TR (RLJ): Free Stock Analysis
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The joint lead arrangers and book running managers for the
transaction were Wells Fargo Securities, LLC, - a unit of
Wells Fargo & Company
), PNC Capital Markets LLC and Merrill Lynch, Pierce, Fenner
& Smith Incorporated - a wing of
Bank of America Corporation
With the new revolving credit facility, RLJ Lodging replaced the
existing one. Due to these combined transactions, the company
expects interest expense savings of roughly $8 million to $10
million in 2013. This is expected to benefit the company's FFO
(funds from operations) in 2013.
RLJ Lodging intends to use proceeds from the term loan to pay off
around $70 million of the outstanding revolving credit facility
worth $85 million. Moreover, the company plans to pay down its
four secured mortgage loans worth $330 million, which was slated
to mature in 2013. In addition to the mortgage loan retirement,
the company's revolving credit facility was adjusted and
reiterated with favorable terms and conditions.
As a matter of fact, with the retirement of these four mortgage
loans, four key assets of RLJ Lodging will be unmortgaged. The
company's unmortgaged assets will thus total 57, representing
around 52% of the total hotel portfolio EBITDA in 2011.
Founded in 2000, RLJ Lodging invests in real estate markets and
manages real estate funds in the U.S. It focuses on the
acquisition of premium-branded, focused-service and compact
The company reported adjusted FFO (funds from operations) of 48
cents in the third quarter of 2012, missing the Zacks Consensus
Estimate by a penny. As of September 30, 2012, RLJ Lodging had
cash and cash equivalent of $192.1 million and $1.4 billion of
outstanding debt, including $85 million outstanding unsecured
We have a long-term Neutral recommendation on RLJ Lodging. Also,
it carries a short-term Zacks #3 Rank (Hold).
Note: FFO, 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