Chatham Lodging Trust, a hotel real estate investment trust (REIT) focused on investing in upscale extended-stay hotels and premium branded, select-service hotels, has issued approximately $83 million of fixed-rate debt since mid-August, including $24.5 million maturing in five years and $58.4 million maturing in 10 years. The debt issuance is comprised of five individual first mortgage loans.
“With these issuances and availability under our unsecured credit facility, we have the ability to repay all debt due through 2024 and will only have to address one $19 million maturing mortgage in 2025,” said Dennis Craven, COO, Chatham. “We have great freedom to create value for our shareholders, whether that is related to refinancing future debt, acquiring/developing hotels or making other hotel investments.”
On Aug. 16, two 10-year loans aggregating $39.9 million were provided by Barclays Capital Real Estate and are secured by the Residence Inn and TownePlace Suites Austin Northwest / The Domain. The loans carry a fixed interest rate of 7.4% per annum and are interest only for the first five years before amortizing based upon a 30-year amortization schedule.
On Aug. 30 and 31, respectively, a five-year, $24.5 million loan and two 10-year loans aggregating $18.5 million were provided by Wells Fargo Bank. The five-year loan is secured by the Courtyard by Marriott Dallas Downtown, carries a fixed interest rate of 7.6% per annum and is interest only for the duration of the loan. The 10-year loans are secured by the Courtyard by Marriott and Residence Inn Charleston Summerville, SC. The 10-year loans carry a fixed interest rate of 7.3% per annum and are interest only for the duration of the loan.
A portion of the proceeds from the loans will be used to repay the approximate $41 million maturing mortgage on the Residence Inn Bellevue Downtown in Washington, which will be repaid in September. The remaining proceeds of approximately $42 million, combined with the full $260 million available on the unsecured credit facility, provide $302 million of proceeds to cover all 2024 maturing debt of $300 million.
“After reducing our net debt during the pandemic by approximately 40%, second most among lodging REITs, we have a great balance sheet that we were able to further solidify with these loans,” said Jeremy Wegner, CFO, Chatham. “With encumbrances on only 14 of our 39 hotels after the Bellevue repayment, we have ample flexibility to appropriately address our maturities at the right time using the best capital source.”
