Moody's rates Host Marriott converts

Moody's Investors Service said it has assigned its Ba3 rating to Host Marriott's proposed $375 million exchangeable debentures due 2024, which will be privately placed and issued under Rule 144A by the REIT's operating subsidiary, Host Marriott LP.

Host Marriott will apply the proceeds from this offering to prepay a portion of its 7.875% notes due August 2008.

Moody's said that given the lower all-in cost of the new debt, this transaction will be accretive to the REIT's earnings, and better support its fixed charge coverages, improving its ability to meet interest coverage test under the bond indenture covenant governing dividend distributions to preferred stockholders. The offering will also enhance the laddering of the REIT's debt maturities.

Moody's ratings outlook for Host Marriott continues to be stable, reflecting the REIT's substantial liquidity and improvements in its capital structure from recent leverage-reducing acquisitions, dispositions of non-core assets, debt reduction and refinancing of more than $1 billion in unsecured bonds.

These efforts have allowed the REIT to lengthen its debt maturities, modestly reduce leverage and lower financing costs. Moody's said it believes that Host Marriott's recent transactions solidify its liquidity and credit profile, despite continued uncertainty regarding the pace of improvement in lodging fundamentals.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.