Moody’s ups ESH Hospitality debt

Moody's Investors Service said it upgraded ESH Hospitality, Inc.'s senior unsecured debt rating to B1 from B2 and senior secured credit facility rating to Ba3 from B1.

The agency affirmed the corporate family rating at B1.

The outlook is positive.

Moody’s said the upgrade recognizes ESH Hospitality's steady progress in reducing its reliance on secured debt over the past several quarters and the expectation for further improvement in the next 12 to 18 months.

“The B1 corporate family rating reflects ESH Hospitality's moderate leverage and good market position in the mid-price extended stay lodging segment,” Moody’s said in a news release.

The REIT also benefits from the less operating-intensive nature of this lodging segment that results from longer average length of stay and lower levels of service. With 625 properties as of June 30, ESH enjoys a wide geographic footprint encompassing 44 states across the United States.

These positive factors are counterbalanced by the lack of an unencumbered asset base, limiting the REIT's financial flexibility. Furthermore, all ESH's properties are managed under a single brand, creating concentration risk.

The agency said the positive outlook reflects an expectation that the REIT's on-going five-year strategic transformation initiative and continued improvements in capital structure will result in a stronger credit profile and enhancements to the REIT's key credit metrics in the next 12 to 18 months.

© 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.