#United States #Aliso Viejo #Credit Agreement #Sunstone Hotels #Hotel Investments

Sunstone Hotel Investors Completes Amended Credit Agreement

Sunstone Hotel Investors, Inc. (NYSE: SHO), a prominent real estate investment trust (REIT) in the hospitality sector, recently finalized a substantial financial restructuring by entering a Third Amended and Restated Credit Agreement. This strategic move raised its borrowing capacity to $1.35 billion, designed primarily to manage immediate financial obligations and enhance the company’s economic stability over the long term.

The Amended Credit Agreement represents a critical step in Sunstone's ongoing efforts to strengthen its balance sheet. The newly structured facilities include various loan options: a $500 million revolving credit line maturing initially in September 2029, a $275 million delayed-draw term loan facility due in January 2029, and additional term loans of $275 million set to mature in 2030 and $300 million in 2031. This financial strategy extends the average maturity of the company’s loans by over three years and reduces overall borrowing costs significantly, allowing the company to prepare for financial flexibility and potential growth opportunities.

According to Bryan A. Giglia, Chief Executive Officer of Sunstone, this refinancing agreement not only provides the means to address upcoming maturities, but also grants increased ability to execute its corporate strategy focused on maximizing shareholder value. "We are grateful for the continued backing from our banking partners, and this expansion in our credit facilities secures access to funding through 2028 while simultaneously lowering our cost of borrowing," he emphasized.

The funds from this new agreement will be used to consolidate four existing loans into a more manageable framework of three loans, significantly reducing complexity in debt servicing. In addition, the company will fully repay its revolving credit facility with the proceeds from the new term loans and will also defer drawing up to $90 million from the delayed-draw term loan facility until January 2026, a strategic decision aimed at fiscal prudence.

Moreover, the company has negotiated a series of interest rate swaps designed to minimize its borrowing expenses and effectively mitigate interest rate risks, resulting in over 75% of its outstanding debt and preferred equity becoming fixed-rate.

This proactive financial maneuvering is expected to position Sunstone for stability amid uncertain economic conditions, allowing it to focus on strategic acquisitions and enhance its asset management capabilities. By reducing pressure from near-term debt maturities, Sunstone can now allocate resources more efficiently and strategically pursue increases in portfolio value, ultimately delivering better returns to its shareholders.

The financing facilities are administered by a consortium of leading financial institutions. Wells Fargo Securities, LLC, BofA Securities, Inc., JPMorgan Chase Bank, N.A., and several others have played pivotal roles in structuring this agreement, ensuring that Sunstone has the financial support needed to navigate the competitive hospitality market effectively.

In summary, the completion of this $1.35 billion credit agreement marks a significant milestone for Sunstone Hotel Investors. It not only reinforces the company’s financial standing but also enhances its capacity to pursue growth initiatives, demonstrating a strong commitment to stakeholder value and sustainability in the hospitality investment landscape.