Moody’s raises ESH to B1, debt to B2

Moody's Investors Service said it upgraded ESH Hospitality, Inc.'s corporate family rating to B1 from B2, senior unsecured rating to B2 from B3 and revised the outlook to positive from stable.

Concurrently, the agency assigned a B1 rating with a positive outlook to ESH's proposed senior secured credit facility, consisting of a $1.3 million seven-year term loan B and a $350 million five-year revolver.

Moody’s said the action follows ESH's Aug. 5 announcement today that launched a new bank credit facility and intends to use the net proceeds together with cash on hand to repay all outstanding CMBS loans (about $1.5 billion as of June 30).

The upgrades reflect the agency’s view that the proposed refinancing, coupled with the $800 million unsecured add-on issuance earlier this year, meaningfully improves ESH's financial flexibility by extending its debt maturity profile and reducing reliance on secured debt.

Pro-forma for the proposed refinancing, ESH will not have any debt maturities until 2023. Furthermore, the proposed refinancing eliminates the CMBS cash trap mechanism, extends and upsizes the revolver to $350 million from $250 million further enhancing ESH's liquidity, the agency said.

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