Summit Hotel Properties successfully closed on a new $275 million senior unsecured term loan, a strategic move to bolster its balance sheet. The company intends to utilize the proceeds from this term loan to repay the majority of its outstanding $287.5 million 1.50% Convertible Senior Notes, which are set to mature in February 2026.
A key feature of the new term loan is its delayed draw option, available through March 1, 2026. This allows Summit Hotel Properties to maintain the attractive 1.50% interest rate on its Convertible Senior Notes until their scheduled maturity date, optimizing interest expense. The term loan itself carries a maturity date of March 2030, with two one-year extension options, significantly extending the company's debt maturity profile.
The initial pricing for the term loan is expected to be SOFR plus 190 basis points, with a pricing grid ranging from 135 to 235 basis points over the applicable adjusted Term SOFR rate. This financing also includes an accordion feature, enabling the company to increase commitments by up to $50 million under certain conditions. As a result of this refinancing, the company's average length to maturity will increase to nearly four years on a pro forma basis, and it will have no significant debt maturities until 2027, while maintaining approximately $320 million of pro rata total liquidity and 77% pro rata fixed interest rate debt after considering interest rate derivative agreements.
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