Sunstone refi enhances financial flexibility

ALISO VIEJO, California – Sunstone Hotel Investors has entered into a $1.35 billion Third Amended and Restated Credit Agreement to address all near-term maturities, extend the duration of the remaining in-place loans, and strengthen the company’s balance sheet.

The agreement includes a $500 million revolving credit facility maturing in September 2029, two $275 million term loan facilities maturing in January 2029 and 2030, and a $300 million term loan facility due January 2031.

At the lodging REIT’s election, the revolving credit facility can be extended to September 2030 and each of the $275 million term loan facilities can be extended to January 2031. The facilities will bear interest pursuant to a leverage-based pricing grid ranging from 1.35% to 2.25% over the applicable term SOFR. In connection with the new facilities, the company entered into a series of interest rate swaps to lower its borrowing cost and better manage interest rate risk, resulting in over 75% of its debt and preferred equity now subject to fixed rates.

This financing provides improved financial flexibility for the company to execute its strategy while continuing to pursue all avenues to maximize shareholder value.

Bryan Giglia

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“We are pleased to announce the recast of our credit facilities and appreciate the continued support from our banking partners. The expanded facilities address all maturities through 2028, extend our average maturity by over three years, and lower our overall cost of borrowing,” said Sunstone CEO Bryan Giglia. “Additionally, this financing provides improved financial flexibility for the company to execute its strategy while continuing to pursue all avenues to maximize shareholder value.”

Sunstone utilized proceeds received from the incremental borrowing on the new term loans to consolidate its prior four term loans into three loans and to fully repay the outstanding balance on its revolving credit facility. In addition, the company is delaying the draw of up to $90 million under the $275 million delayed-draw term loan facility until January 2026 and expects to use a majority of the proceeds to repay the Series A Senior Notes at their scheduled maturity. Following this repayment, Sunstone will not have any debt maturities until 2028.

Sunstone’s unsecured credit facilities are led jointly by Wells Fargo Securities, LLC, BofA Securities, Inc., JPMorgan Chase Bank, N.A., PNC Capital Markets LLC, U.S. Bank National Association, Truist Securities, Inc., Regions Capital Markets and The Huntington National Bank.