DiamondRock Closes Financing - Analyst Blog
December 21 2012 - 6:30AM
Zacks
In an effort to reduce its interest
costs and extend its debt maturity, DiamondRock Hospitality
Co. (DRH), a real estate investment trust (REIT), recently
closed on a $74 million loan financing secured by its Westin
Washington D.C. City Center hotel. The 10-year loan carries a fixed
interest rate of 3.99%. With this transaction, of the 27 hotels
owned by DiamondRock, 15 remain unencumbered by property-specific
mortgage debt.
The proceeds from the loan will be utilized to repay outstanding
debts on the company's credit facility. DiamondRock expects to have
approximately $20 million outstanding debt under its $200 million
senior unsecured credit facility by the end of 2012.
The strategic move is aimed to significantly reduce its borrowings
under its credit facility, lower its interest burden, and
capitalize on further growth opportunities. As of September 7,
2012, the company had $21.6 million of unrestricted cash on hand
and approximately $1.0 billion of total debt.
DiamondRock is an owner of premium hotel properties. The company
acquires and invests in upscale hotels under the Hilton, Marriot
and Westin brands across the U.S. The company reported adjusted FFO
(funds from operations) of 18 cents per share in the third quarter
of 2012, missing the Zacks Consensus Estimate by a penny.
Currently, the company owns 27 premium hotels with approximately
11,600 rooms.
DiamondRock currently retains a Zacks #3 Rank, which translates
into a short-term Hold rating. We have a long-term Neutral
recommendation on the stock. One of its competitors,
Ashford Hospitality Trust Inc (AHT) holds a Zacks
#3 Rank, which translates into a short term Hold rating.
Note: Fund from operations, a widely used metric to gauge the
performance of REITs, is obtained after adding depreciation and
amortization and other non-cash expenses to net income.
ASHFORD HOSPTLY (AHT): Free Stock Analysis Report
DIAMONDROCK HOS (DRH): Free Stock Analysis Report
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