S&P rates RLJ B+, notes BB-

S&P said it gave RLJ Lodging Trust a B+ issuer rating and BB- with 2 recovery ratings to RLJ Lodging Trust LP’s planned offering of $400 million of senior secured notes. The 2 recovery rating indicates an expectation of substantial recovery in default.

“The B+ issuer credit rating reflects our expectation that leverage will decrease to below our 6.5x downgrade threshold in 2022.RLJ reported that its portfolio RevPAR improved in the first quarter of 2021 (to 64% below 2019 levels) compared with the fourth quarter of 2020 (72% below 2019 levels) due primarily to an increase in drive-to and leisure demand for all-suite and select service hotels,” S&P said in a press release.

RLJ will use the proceeds to refinance 2022 and 2023 debt maturities and for general corporate purposes.

The outlook is negative, indicating very high leverage through 2022 and significant residual risks to the lodging industry recovery, the agency said.

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