Service Properties amends $1 billion revolver, $400 million term loan

By Cady Vishniac

Detroit, Nov. 6 – Service Properties Trust amended the credit agreement on its $1 billion revolver and $400 million term loan, according to a company press release.

The amendment waives all financial covenants on the credit agreement through July 15, 2022. During this period, Service Properties will continue to have access to undrawn amounts under the revolver.

In connection with the amendment, the company repaid its $400 million term loan on Nov. 5 using undrawn amounts under its revolver.

The amendments to the agreement also include:

• Service Properties has pledged equity interests of subsidiaries owning properties with undepreciated book values. Together with the existing pledged equity interests, these properties come to $1.8 billion as of September 30. The company will provide first mortgage liens on 74 properties owned by the pledging subsidiaries to secure its obligations under the credit agreement. These properties include 62 travel centers in 26 states and 12 hotels in nine states, with aggregate gross book values of $1.2 billion and $641 million, respectively, as of September 30;

• The ability to fund up to $250 million of capital expenditures per year and up to $50 million of other investments per year by the company;

• The interest rate premium over Libor under the company’s revolving credit facility increased by 30 basis points;

• Covenants and restrictions on distributions to common shareholders, share repurchases, incurring debt and acquisition of real property, and the minimum liquidity requirement of $125 million, will remain in place during the waiver period; and

• Service Properties must apply net cash proceeds from the disposition of assets, capital market transactions and debt refinancing to repaying outstanding loans under the credit agreement, then to repaying other debt maturities.

Wells Fargo Securities, LLC, BofA Securities, Inc., PNC Capital Markets, LLC and RBC Capital Markets are joint lead arrangers and joint lead bookrunners on the amendment. Wells Fargo Bank, NA is the administrative agent. Bank of America, NA, PNC Bank, NA and Royal Bank of Canada are the syndication agents.

Service Properties Trust is a Newton, Mass.-based real estate investment trust focused on a portfolio of hotels and net lease service and necessity-based retail properties.

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