SUNSTONE HOTEL INVESTORS, INC. : Entering into a Material Definitive Agreement, Creating a Direct Financial Obligation or Obligation Under an Off-Balance Sheet Arrangement of a Registrant, Settlement FD Disclosure, Financial Statements and Exhibits (Form 8-K)

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Article 1.01. Entering into a Material Definitive Agreement.

On July 25, 2022, Sunstone Hotel Investors, Inc. (the “Company”) entered into a second amended and restated credit agreement (the “amended credit agreement”) between the Company, Sunstone Hotel Partnership, LLC, Wells Fargo Bank, National Association, Bank of America, North America., JPMorgan Chase Bank, North America., PNC Bank, National Association, National Association of American Banks, Truist Bank, The Huntington National BankThe Bank of Nova Scotia, Bank of Regions and Bank of Hawaii. The Amended Credit Agreement provides for a $500 million unsecured revolving credit facility and two term loan facilities in the aggregate amount of $350 million. Wells Fargo Securities, LLC, BofA Securities, Inc., JPMorgan Chase Bank, North America., PNC Capital Markets LLC, National Association of American Banks,
Trust Securities, Inc.and The Huntington National Bank are co-leaders, Wells Fargo Securities, LLC, BofA Securities, Inc.and JPMorgan Chase Bank, North America. are joint bookrunners, Bank of America, North America. and JPMorgan Chase Bank, North America. are syndication agents, PNC Bank, National Association, National Association of American Banks, Truist Bankand The Huntington National Bank are documentation officers, and JP Morgan Securities LLC is the sustainability officer for the amended credit agreement. The Company’s operating partnership, Sunstone Hotel Partnership, LLCis the borrower under the amended credit agreement and certain of the Company’s subsidiaries guarantee its obligations under the amended credit agreement.

The revolving credit facility under the Amended Credit Agreement matures on July 25, 2026. The Company may extend the maturity date of the Revolving Credit Facility under the Amended Credit Agreement, exercisable twice, by six (6) months for each extension, until July 25, 2027, subject to the payment of the applicable fees and the satisfaction of certain conditions of use. The Company also has the right to increase the revolving portion of the amended credit agreement, or to add term loans, up to $250 millionfor a global installation of $1.1 billionin the case of each such increase, with lenders who are at that time willing to make such increase or term loans.

Under the Amended Credit Agreement, the Company increased the aggregate amount of its two unsecured term loans by $108 million at $350 million. The two term loan facilities each have a balance of $175 million and mature in July 2027 and January 2028.

Interest is paid on the periodic advances on the revolving facility and amounts
outstanding on the term loans at varying rates, based upon adjusted SOFR as
defined in the Amended Credit Agreement plus an applicable margin. The
applicable margin is based upon the Company's ratio of net indebtedness to
EBITDA, as follows:

Level      Leverage Ratio        Applicable     Applicable    Applicable    Applicable
                                 Margin for     Margin for    Margin for    Margin for
                                 Revolving      Revolving     Term Loans    Term Loans
                               Loans that are Loans that are   that are      that are
                                 SOFR Loans     Base Rate     SOFR Loans    Base Rate
                                                  Loans                       Loans
  1          Less than             1.40%          0.40%          1.35%        0.35%
            3.00 to 1.00
  2   Greater than or equal to     1.45%          0.45%          1.40%        0.40%
            3.00 to 1.00
           but less than
            3.50 to 1.00
  3   Greater than or equal to     1.50%          0.50%          1.45%        0.45%
            3.50 to 1.00
           but less than
            4.00 to 1.00
  4   Greater than or equal to     1.60%          0.60%          1.55%        0.55%
            4.00 to 1.00
           but less than
            5.00 to 1.00
  5   Greater than or equal to     1.80%          0.80%          1.75%        0.75%
            5.00 to 1.00
           but less than
            5.50 to 1.00
  6   Greater than or equal to     1.95%          0.95%          1.85%        0.85%
            5.50 to 1.00
           but less than
            6.00 to 1.00
  7   Greater than or equal to     2.25%          1.25%          2.20%        1.20%
            6.00 to 1.00

In addition, the Amended Credit Agreement also includes a sustainability-related pricing component whereby the applicable margin may be reduced by up to 0.02% if the borrower meets certain sustainability performance targets.

In addition to interest payable on amounts unpaid under the amended credit agreement, the Company is required to pay an amount equal to 0.20% of the unused portion of the revolving commitments if the average unused amount of the revolving commitments is less than or equal to 50% and 0.25% if the average unused amount of renewable commitments is greater than 50%.

The Amended Credit Agreement and Amended Term Loans contain various corporate financial covenants. Here is a summary of some clauses:

                                                       Covenant
Maximum leverage ratio               6.50:1.00
Minimum fixed charge coverage
ratio                                1.50:1.00
Maximum unencumbered leverage
ratio                                0.60:1.00
Minimum unsecured interest
expense coverage ratio               2.00:1.00
Secured Indebtedness                 Less than 45% of Total Asset Value

The amended credit agreement requires the company to maintain a designated group of unencumbered debt base properties. The unencumbered loan base must be a minimum of seven (7) properties with an unencumbered loan base asset value, as defined, of at least $500 million.

The Amended Credit Agreement contains positive and negative representations, financial covenants and other covenants, events of default and remedies typical for this type of facility.

The foregoing description of the Amended Credit Agreement and Amended Term Loans is qualified in its entirety by the complete terms and conditions of the Amended and Restated Credit Agreement which is filed as Schedule 10.1 hereto. current report on Form 8-K and incorporated herein by reference. .

Item 2.03Creation of a Direct Financial Obligation or Obligation Under an Off-Balance Sheet Arrangement of a Registrant.

The information set forth in Section 1.01 of this Current Report on Form 8-K is incorporated by reference in this Section 2.03.

Section 7.01 Disclosure of FD Rules.

On July 27, 2022, the Company has issued a press release announcing the closing of the Second Amended and Restated Credit Agreement. A copy of this press release is provided as Exhibit 99.1 to this report. The press release was also posted on the investor relations section of the company’s website at www.sunstonehotels.com.

The information contained in the press release attached as Exhibit 99.1 to this report is not deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of this article. Further, the information contained in the press release attached as Exhibit 99.1 to this report is not deemed to be incorporated by reference in any filing by the registrant under the Securities Act of 1933, such as modified.

Item 9.01 Financial statements and supporting documents.

(d) Exhibits

Exhibit No.                               Description
   10.1         Second Amended and Restated Credit Agreement, dated July 25,
              2022.
   99.1         Press Release, dated July 27, 2022.
    104       Cover Page Interactive Data File (embedded within the Inline XBRL
              document).

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