Winston Hotels, Inc. (NYSE: WXH), today announced that the Company recently completed an interest rate swap on $50 million of its outstanding variable rate debt under its $140 million line of credit (the “Line”). Wachovia Bank, N.A. conducted the transaction.
This transaction effectively replaces the Company’s variable interest rate based on 30-day LIBOR on $50 million of the Line with a fixed interest rate of 5.915% for two years. The Company’s interest rate spread on the Line is currently 1.45%, resulting in a current total fixed interest rate of 7.365% on $50 million of the Line. Along with $69 million in outstanding CMBS debt, which carried a fixed interest rate of 7.375%, the transaction locks in approximately 70% of the Company’s total outstanding debt at very attractive rates.
“This transaction enhances Winston’s long-term strategy,” said Jim Rosenberg, President and COO of Winston Hotels, Inc., “Locking in a more attractive interest rate offers the company greater flexibility to deal with changing markets conditions. Moreover, we believe that by implementing our latest interest rate strategy, our “all-in” interest rate compares very favorably to our peer group.”
Joe Green, Executive Vice President and CFO of Winston Hotels, Inc. commented: “In order to mitigate its interest rate risk, the Company decided to “swap” a portion of its floating rate for a very desirable fixed rate for the next two years.”