Item 1.01Entry into a Material Definitive Agreement.
On November 7, 2024, Sunstone Hotel Investors, Inc. (the “Company”) entered into a Term Loan Agreement (the “Term Loan Agreement”) among the Company, Sunstone Hotel Partnership, LLC, Wells Fargo Bank, National Association, Bank of America, N.A., JPMorgan Chase Bank, N.A., Truist Bank, U.S. Bank National Association, Huntington Bank, PNC Bank, National Association, Regions Bank, and Bank of Hawaii.
The Term Loan Agreement provides for a $100 million unsecured delayed draw term loan facility. Wells Fargo Securities, LLC, BofA Securities, Inc., JPMorgan Chase Bank, N.A., Truist Securities, Inc., U.S. Bank National Association, Huntington Bank and PNC Bank, National Association are joint lead arrangers, Wells Fargo Securities, LLC, BofA Securities, Inc., and JPMorgan Chase Bank, N.A. are joint bookrunners, BofA Securities, Inc. and JPMorgan Chase Bank, N.A. are syndication agents and Truist Bank, U.S. Bank National Association, Huntington Bank and PNC Bank, National Association are documentation agents. The Company’s operating partnership, Sunstone Hotel Partnership, LLC, is the borrower under the Term Loan Agreement and certain of the Company’s subsidiaries guarantee its obligations under the Term Loan Agreement.
The delayed draw term loan facility under the Term Loan Agreement matures on November 7, 2025. The Company may extend the maturity date of the delayed draw term loan facility under the Term Loan Agreement, exercisable two times, by six (6) months per each request, to November 7, 2026, upon the payment of applicable fees and satisfaction of certain customary conditions.
Interest is paid on the amounts outstanding on the delayed draw term loans at varying rates, based upon Adjusted Term SOFR as defined in the Term Loan Agreement plus an applicable margin. The applicable margin is based upon the Company’s ratio of net indebtedness to EBITDA, as follows:
| | | |
Level | Leverage Ratio | Applicable Margin for Loans that are Term SOFR Loans | Applicable Margin for loans that are
Base Rate Loans |
1 | Less than
3.00 to 1.00 | 1.35% | 0.35% |
2 | Greater than or equal to
3.00 to 1.00
but less than
3.50 to 1.00 | 1.40% | 0.40% |
3 | Greater than or equal to
3.50 to 1.00
but less than
4.00 to 1.00 | 1.45% | 0.45% |
4 | Greater than or equal to
4.00 to 1.00
but less than
5.00 to 1.00 | 1.55% | 0.55% |
5 | Greater than or equal to
5.00 to 1.00 but less than 5.50 to 1.00 | 1.75% | 0.75% |
6 | Greater than or equal to
5.50 to 1.00 but less than 6.00 to 1.00 | 1.85% | 0.85% |
7 | Greater than or equal to 6.00 to 1.00 | 2.20% | 1.20% |
