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Summit Hotel Properties Secures $275 Million Term Loan

In a significant financial maneuver, Summit Hotel Properties, Inc. (NYSE: INN) has announced the successful closure of a new $275 million senior unsecured term loan designed to bolster its financial stability and strategic initiatives. This financing is particularly noteworthy as it reflects the company's commitment to maintaining a robust balance sheet while addressing impending financial obligations.

Utilization of the Term Loan

Summit Hotel Properties plans to use the proceeds from this term loan to repay a major portion of its outstanding $287.5 million 1.50% Convertible Senior Notes, which are set to mature in February 2026. The loan features a delayed draw option available until March 1, 2026, allowing the company to secure the favorable 1.50% interest rate on the convertible notes through their maturity date. This strategic decision not only conserves cash but also positions the company for further investment opportunities in the hospitality sector.

Trey Conkling, the Executive Vice President and Chief Financial Officer of Summit Hotel Properties, remarked on the importance of this financing. He expressed appreciation for the unwavering support from their lending partners and emphasized the refinancing's role in extending the company's debt maturity profile, enhancing flexibility, and allowing the company to execute its strategic directives effectively.

Financial Details and Terms

The new term loan is set to mature in March 2030, with an option for two one-year extensions. Its pricing grid is structured between 135 to 235 basis points over the adjusted Term SOFR rate, with initial expectations placing it at SOFR plus 190 basis points. An accordion feature allows for increasing commitments by up to $50 million, subject to specific conditions, complementing the existing credit facilities that Summit maintains.

The refinancing effort is projected to extend the average maturity length to nearly four years on a pro forma basis. This allows the company to navigate its debt landscape efficiently, with no significant maturities scheduled until 2027, thereby providing a cushion against market volatility.

Summit Hotel Properties also announced having approximately $320 million of pro-rated total liquidity, alongside a substantial proportion of 77% of its debt and preferred equity capital being fixed-rate agreements, all of which contribute to a well-balanced capital structure.

The Role of Financial Partners

The transaction was complex, involving multiple financial institutions, including Bank of America, N.A., as the administrative agent, and Wells Fargo Bank, N.A., as syndication agent. Other notable participants included Capital One, Huntington National Bank, JPMorgan Chase Bank, and Truist Securities, which demonstrates a strong backing from prominent banking entities in the industry. Their collaborative efforts as co-documentation agents and arrangers highlight the trust and strategic relationships Summit has built in the financial community.

About Summit Hotel Properties

Founded with a focus on owning premium-branded lodging assets, Summit Hotel Properties operates primarily in the upscale segment of the hospitality industry. As of March 31, 2025, the company boasts a portfolio of 97 assets, with 53 wholly owned properties, translating into 14,554 guestrooms across 25 states. Their model emphasizes efficient operations, thus maintaining profitability and providing excellent service in their establishments.

For more details about Summit Hotel Properties, visit their official website at www.shpreit.com or follow them on Twitter under the handle @SummitHotel_INN. This strategic financing might be just what the company needs to navigate through challenging economic times and emerge stronger in the ever-competitive hospitality sector.

Conclusion

This recent financing initiative by Summit Hotel Properties highlights an essential step towards strengthening their financial position while strategically addressing upcoming maturity obligations. With a robust plan in place and the continued support of reputable financial partners, the company aims to enhance its market presence and operational capacity going forward.