Zacks_Analysts' Blog : Credit Line for Hospitality Properties - Analyst Blog

Hospitality Properties Trust (HPT), a real estate investment trust (REIT), has recently obtained a new unsecured revolving credit facility worth $750 million that is scheduled to mature in September 2015. The new credit facility replaced the existing unsecured revolving credit facility of the same amount that was due to mature in October 2011.

The new credit facility has an accordion feature, whereby the borrower could extend the maturity date by a year. The company could also increase the borrowing capacity of the new credit facility to a maximum of $1.5 billion in certain circumstances.

Based on the current credit ratings of Hospitality Properties, the credit facility bears an interest rate at LIBOR plus 130 basis points. The debt facility is provided by a consortium of 15 leading financial institutions.

Hospitality Properties presently owns 288 hotels and 185 travel centers across the U.S., Ontario, Canada and Puerto Rico. The company does not operate the properties on its own and instead has long-term lease agreements with unaffiliated hospitality management companies, which run the properties on its behalf.

The hotels of Hospitality Properties are operated by some of the largest and most experienced hotel management companies in the world, such as Marriott International, Inc. (MAR), Intercontinental Hotels Group plc (IHG), and Hyatt Hotels Corporation (H).  The travel centers of the company are operated by TravelCenters of America LLC (TA).

We currently have an ‘Outperform’ recommendation for Hospitality Properties, which presently has a Zacks #2 Rank that translates into a short-term ‘Buy’ rating.