Thursday, August 8, 2024
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Braemar Hotels & Resorts reduces interest costs and extends loan terms to 2029 through a $407 million strategic refinancing of five prime hotel properties.
Braemar Hotels & Resorts Inc. (“Braemar” or the “Company”) has successfully completed a significant refinancing transaction for five of its hotel properties. The new loan is for $407 million and has an initial term of two years with an option to extend for three additional one-year periods, potentially extending the term of the loan to 2029 subject to the satisfaction of certain conditions. This loan is structured as an interest-only loan and has a variable interest rate of SOFR + 3.24%.
In a strategic move, Braemar acquired $42.2 million of the most junior tranche of this loan, effectively reducing the net spread on the remaining $364.8 million to SOFR + 3.01%. This refinancing transaction is secured by five prime properties: Pier House Resort & Spa, Bardessono Hotel & Spa, Hotel Yountville, The Ritz-Carlton Sarasota, And The Ritz-Carlton St. Thomas.
This new loan replaces several existing loans, including an $80 million loan for the Pier House Resort & Spa, which had an interest rate of SOFR + 3.60% and would have matured in September 2025. In addition, this transaction refinanced a $42.5 million loan for the Ritz-Carlton St. Thomas with an interest rate of SOFR + 4.35% and a maturity date of August 2026.
In addition, the refinancing also includes the replacement of a $200 million corporate loan and credit facility. This facility was secured by The Ritz-Carlton Sarasota, Hotel Yountville and Bardessono Hotel & Spa and had an interest rate of SOFR + 3.10%, with a maturity date set for July 2027.
Overall, this refinancing exercise by Braemar not only extends the maturity of its debt, but also optimizes its financial structure by reducing the net spread on a significant portion of the loan. This strategic financial maneuver ensures the continued support of its high-quality properties while maintaining favorable loan terms.
“We are pleased to announce the completion of this financing at an attractive spread,” said Richard J. Stockton, President and CEO of Braemar“This financing not only results in a lower cost of capital for the debt on these assets, but also improves our maturity schedule and extends our weighted average life.”
