Winston Hotels, a real estate investment trust (REIT) and owner of premium limited-service, upscale extended-stay and full-service hotels, today announced that one of its wholly owned subsidiaries has entered into a five-year line of credit with General Electric Capital Corporation. The GE line of credit provides for revolving loan commitments of up to $155 million.
Borrowings bear interest at rates from 30-, 60-, 90- or 120-day LIBOR (at the company’s option) plus 1.75% to 2.50%, based on the ratio of the underwritten net operating income of the hotels that collateralize the facility to the outstanding principal balance of the line. The current interest rate is 30-day LIBOR plus 2.00%. Borrowings under the GE line are collateralized by 23 hotel properties owned by one of the company’s wholly owned subsidiaries.
At closing, the company borrowed $77.5 million under the GE line and paid off all outstanding debt under its then-existing $125 million credit facility led by Wachovia Bank and terminated that facility.
“GECC is a major player in hotel finance. They have the ability to think outside the box to create unique credit facilities like ours, and we look forward to exploring other ways to work with them. Through this credit facility and our Marathon Funding $50 million credit facility, we now have approximately $127 million available to finance our external growth strategies of 1) acquiring both profitable and deep turn-around hotels that require repositioning, 2) our debt investment financing program, and 3) hotel development,” said Joe Green, president and chief financial officer.
“We have significant pipeline activity in all of our external growth strategies,” he added. “We believe that Winston has the flexibility it needs to respond opportunistically to the options before us, and we will continue to be deliberate in our approach to seek those transactions that we believe offer the highest and best returns on a risk-adjusted basis.”
“The GE facility is unique in its structure because it gives our client better flexibility to run their business than a typical bank line would permit, while giving us the comfort that our loan is collateralized by strong assets,” said Mike Rowan, Senior Vice President of GE Commercial Finance Real Estate. Rowan added that he was “quite pleased to be able to close this facility and expand our relationship with Winston Hotels.”
The Company also announced today that it has received a full prepayment of its $6 million piece of the total $16.85 million loan provided in June 2004 to finance the acquisition and major refurbishment/conversion of the Cornhusker Square Hotel in Lincoln, Neb. The original term of the loan was for two years, plus a one-year extension at the option of the borrower. The Company and Canyon Capital Realty Advisors, a national lending and real estate investment firm, issued the original $16.85 million loan. In addition to the total $6 million principal amount, the Company also received accrued interest plus exit and prepayment fees totaling approximately $370,000. The Company used the proceeds from the early payoff to pay down its outstanding principal balance under the GE Line. Approximately $77.0 million is currently available under the line.