DiamondRock Hospitality Co. ( DRH ), a real estate investment trust (REIT), recently amended its $200 million senior unsecured credit facility which will enable the company to reduce borrowing cost and extend its debt maturity.
Scheduled to mature in January 2018, the amended facility has an accordion feature that will enable DiamondRock Hospitality to further increase its borrowing capacity to $400 million. The new facility bears interest ranging from 175 to 275 basis points over LIBOR.
As of September 7, 2012, the company had $21.6 million of unrestricted cash on hand and approximately $1.0 billion of total debt. Subsequent to the end of third quarter 2012, the company used the proceeds from the sale of the Westin Atlanta North to repay $35 million on the credit facility. Presently the company has $105 million in outstanding borrowings under the facility.
DiamondRock Hospitality is an owner of premium hotel properties. The company acquires and invests in upscale hotels under the Hilton, Marriot and Westin brands across the US. The company reported adjusted FFO (funds from operations) of 18 cents per share in the third quarter 2012, missing the Zacks Consensus estimate by a penny. Currently, the company owns 27 premium hotels with approximately 11,600 rooms along with a senior mortgage loan on a premium hotel.
DiamondRock Hospitality currently retains a Zacks #4 Rank, which translates into a short-term Sell rating. We have a long-term Underperform recommendation on the stock. One of its competitors, Ashford Hospitality Trust Inc ( AHT ) holds a Zacks #3 Rank, which translates into a short term Hold rating.
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.
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