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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of The Securities Exchange Act of
1934
Date of Report (Date of earliest event reported): August 4,
2022
HERSHA HOSPITALITY TRUST
(Exact name of registrant as specified in its charter)
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Maryland |
001-14765 |
25-1811499 |
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(State or other jurisdiction of incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
44
Hersha Drive
Harrisburg, Pennsylvania 17102
(Address and zip code of
principal executive offices)
Registrant’s telephone number, including area
code: (717)
236-4400
Check the appropriate box below if the Form 8-K filing is intended
to simultaneously satisfy the filing obligation of the registrant
under any of the following provisions (see General Instructions
A.2. below):
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☐ |
Written communications pursuant to Rule 425 under the Securities
Act (17 CFR 230.425) |
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12) |
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Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b)) |
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Pre-commencement communications pursuant to Rule 13e4(c) under the
Exchange Act (17 CFR 240.13e-4(c)) |
Indicate by check mark whether the registrant is an emerging growth
company as defined in Rule 405 of the Securities Act of 1933 or
Rule 12b-2 of the Securities Exchange Act of 1934.
Emerging growth company
☐
If an emerging growth company, indicate by check mark if the
registrant has elected not to use the extended transition period
for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the Exchange
Act.
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Securities registered pursuant to Section 12(b) of the Act:
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Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered |
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Class A Common Shares of Beneficial Interest, par value $.01 per
share |
HT |
New York Stock Exchange |
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6.875% Series C Cumulative Redeemable Preferred Shares of
Beneficial Interest, par value $.01 per share |
HT-PC |
New York Stock Exchange |
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6.50% Series D Cumulative Redeemable Preferred Shares of Beneficial
Interest, par value $.01 per share |
HT-PD |
New York Stock Exchange |
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6.50% Series E Cumulative Redeemable Preferred Shares of Beneficial
Interest, par value $.01 per share |
HT-PE |
New York Stock Exchange |
Item 1.01 Entry Into a Material Definitive Agreement.
On August 4, 2022, Hersha Hospitality Trust (the “Company”),
together with certain subsidiaries, entered into a Credit Agreement
(the “Credit Agreement”) with certain lenders (the “Lenders”), for
whom Citibank, N.A. (“Citibank”) is acting as the administrative
agent and collateral agent. The Term Loan (as defined below)
refinancing was arranged by Citibank, Wells Fargo Securities, LLC,
and Manufacturers and Traders Trust Company as joint lead arrangers
and joint book running managers. Wells Fargo Bank, N.A. and
Manufacturers and Traders Trust Company acted as co-syndication
agents. Manufacturers and Traders Trust Company, Fifth Third Bank
and Wilmington Savings Fund Society, FSB acted as co-documentation
agents. Other participating lenders include Goldman Sachs Bank USA,
Raymond James Bank, N.A., The Huntington National Bank and The
Provident Bank. The Credit Agreement provides for a $100,000,000
senior secured revolving line of credit and a $400,000,000 senior
secured term loan (the “Term Loan”). The Company’s operating
partnership, Hersha Hospitality Limited Partnership (the “Operating
Partnership”), is the borrower under the Credit Agreement with the
Company as the parent guarantor. The maturity date of the revolving
credit facility is August 4, 2024 and the maturity date of the term
loan is August 4, 2024. The Operating Partnership has the right to
extend the maturity date of either or both the revolving credit
facility and the term loan for one additional twelve-month period
subject to satisfaction of certain conditions and required lender
consent. Pursuant to the Credit Agreement, the Company and certain
indirect subsidiaries of the Company guarantee to the Lenders all
of the obligations of the Operating Partnership and each other
guarantor under the Credit Agreement, any notes and the other loan
documents, including any obligations under hedging arrangements.
From time to time, the Operating Partnership may be required to
cause additional subsidiaries to become guarantors under the Credit
Agreement.
Subject also to financial covenants, sublimits and other
restrictions contained in the Credit Agreement, availability under
the Credit Agreement is based on the lesser of (a) the aggregate
amount of the total revolving commitments and term loan commitments
and (b) the least of (x) the Borrowing Base Value (as defined in
the Credit Agreement) attributable to Borrowing Base Assets (as
defined in the Credit Agreement and as described below), (y) the
amount that would result in a ratio of adjusted net operating
income for all Borrowing Base Assets to the available amount of
outstanding letters of credit plus the outstanding advances
equaling 12%, and (z) the amount that would result in the ratio of
all outstanding advances and letters of credit to the value of all
Borrowing Base Assets equaling 55%. Eighteen properties are
Borrowing Base Assets as of the closing of the Credit Agreement:
The Boxer, NU Hotel, Parrot Key Resort, Winter Haven Hotel, Blue
Moon Hotel, The Rittenhouse, Cadillac Hotel and Beach Club Miami
Beach, Hampton Inn Manhattan-Seaport Financial District, Hilton
Garden Inn JFK, Hyatt House White Plains, Holiday Inn Express 29th
Street, Envoy Hotel, Ambrose Hotel, Mystic Marriot, The Westin
Philadelphia, Gate JFK Airport Hotel, Ritz Carlton Georgetown, and
the Pan Pacific Hotel. All Borrowing Base Assets other than Gate
JFK Airport Hotel and Ritz Carlton Georgetown are, as of the
closing of the Credit Agreement, subject to a mortgage or deed of
trust, as applicable, securing indebtedness and other obligations
under the Credit Agreement.
The Operating Partnership, subsidiary guarantors, and certain other
affiliates of the Operating Partnership (the “Grantors”) also
entered into a separate Security Agreement (the “Security
Agreement”), pursuant to which the Grantors pledged, in favor of
the collateral agent, either (i) all or substantially all of their
assets or (ii) the equity held in their direct subsidiaries, as
described in the Security Agreement. From time to time, the
Operating Partnership may be required to cause additional
subsidiaries to become grantors under the Security
Agreement.
All borrowings under the Credit Agreement will bear interest at a
rate per annum equal to, at the option of the Company, either (i)
Adjusted Term SOFR (defined as the forward-looking term rate based
on SOFR plus 0.10%) or (ii) the Base Rate (defined as the highest
of (a) the rate of interest announced publicly by Citibank, as its
base rate, (b) ½ of 1% per annum above the Federal Funds Rate (as
defined in the Credit Agreement) and (c) the Adjusted Term SOFR for
a one-month Interest Period (as defined in the Credit Agreement) in
effect on such day plus 1.00% per annum), in either case, plus the
Applicable Margin (as defined in the Credit Agreement). The
Applicable Margin is (i) with respect to any Adjusted Term SOFR
Advance, 2.50% and (ii) with respect to any Base Rate Advance,
1.50%. The Credit Agreement provides for a 0.00% floor for
borrowings at Adjusted Term SOFR and a 1.00% floor for borrowings
at the Base Rate. The Credit Agreement also permits the issuance of
letters of credit.
The Credit Agreement contains representations, warranties,
covenants, terms and conditions customary for transactions of this
type, including maximum leverage ratio, minimum fixed charge
coverage ratio and maximum dividend payout ratio financial
covenants, borrowing base financial covenants, limitations on
liens, incurrence of debt, investments, mergers and asset
dispositions, covenants to preserve corporate existence and comply
with laws, covenants on the use of proceeds of the credit facility
and default provisions, including defaults for non-payment, breach
of representations and warranties, insolvency, non-performance of
covenants, cross-defaults and guarantor defaults. The occurrence of
an event of default under the Credit Agreement could result in all
loans and other obligations becoming immediately due and payable
and the credit facility being terminated and allow the Lenders to
exercise all rights and remedies available to them.
Several of the Lenders and their affiliates have provided, and they
and other Lenders and their affiliates may in the future provide,
various investment banking, commercial banking, fiduciary and
advisory services for the Company from time to time for which they
have received, and may in the future receive, customary fees and
expenses.
Capitalized terms used in this Item 1.01 and not otherwise defined
have the meanings ascribed to them in the Credit Agreement.
A copy of the Credit Agreement is attached hereto as Exhibit 10.1
and is incorporated herein by reference. A copy of the Security
Agreement is attached hereto as Exhibit 10.2 and is incorporated
herein by reference. The foregoing descriptions of the Credit
Agreement and Security Agreement are qualified in its entirety by
reference to the full text of the Credit Agreement and full text of
the Security Agreement.
Item 1.02
Termination of a Material Definitive Agreement
On August 4, 2022, the Company entered into the Credit Agreement
described in Item 1.01 of this Current Report, and then the Company
proceeded to immediately withdraw $400,000,000 from the new senior
secured credit facility.
The proceeds from the initial draw were used, in connection with
other funds, to pay off and terminate the (i) Term Loan Agreement,
dated as of August 2, 2016, by and among the Operating Partnership,
as borrower, the Company, as parent guarantor, the subsidiary
guarantors named therein, the lenders from time to time party
thereto, and Citibank, as administrative agent (as amended and
modified from time to time, the “2016 Term Loan Agreement”), (ii)
Second Amended and Restated Credit Agreement, dated as of August
10, 2017, by and among the Operating Partnership, as borrower, the
Company, as parent guarantor, the subsidiary guarantors named
therein, the lenders from time to time party thereto, and Citibank,
as administrative agent (as amended and modified from time to time,
the “2017 Credit Agreement”), and (iii) Amended and Restated Term
Loan Agreement, dated as of September 10, 2019, by and among the
Operating Partnership, as borrower, the Company, as parent
guarantor, the subsidiary guarantors named therein, the lenders
from time to time party thereto, and Citibank, as administrative
agent (as amended and modified from time to time, the “2019 Loan
Agreement”, and together with the 2016 Term Loan Agreement and 2017
Credit Agreement, the “Prior Facilities”).
The material terms and conditions pertaining to the Credit
Agreement are set forth in Item 1.01 of this Current Report and to
the extent required by Item 1.02 of Form 8-K, the information
contained in or incorporated by reference into Item 1.01 of this
Current Report is hereby incorporated by reference into this Item
1.02.
Item 2.03
Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement of a Registrant.
The information set forth under Item 1.01 of this Current Report on
Form 8-K is incorporated herein by reference.
Item 8.01
Other Events
In conjunction with the closing of the Credit Agreement, the
Company fully redeemed the Company’s junior subordinated notes,
which the Company entered into on February 17, 2021, payable at a
redemption price of 104%, or approximately $164.4 million in the
aggregate, plus accrued interest.
Item 9.01 Financial Statements and
Exhibits.
(d) Exhibits.
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Exhibit No. |
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Description |
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Credit Agreement, dated as
of August 4, 2022, by and among Hersha Hospitality Limited
Partnership, as borrower, Hersha Hospitality Trust, as parent
guarantor, the subsidiary guarantors named therein, as guarantors,
the initial lenders and initial issuing banks named therein,
Citibank, N.A., as administrative agent and collateral agent, Wells
Fargo Bank, N.A. and Manufacturers and Traders Trust Company, as
co-syndication agents, Manufacturers and Traders Trust Company,
Fifth Third Bank and Wilmington Savings Fund Society, FSB, as
co-documentation agents, and Citibank, N.A., Wells Fargo
Securities, LLC, and Manufacturers and Traders Trust Company, as
joint lead arrangers and joint book running
managers.
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Pursuant to Item 601(b)(2) of Regulation S-K, the Company hereby
agrees to supplementally furnish to the SEC upon request any
omitted schedule or exhibit to the Security Agreement. |
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104 |
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Cover Page Interactive Data File |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly
authorized.
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HERSHA HOSPITALITY TRUST |
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Date: August 8, 2022 |
By: |
/s/ Ashish R. Parikh |
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Name: |
Ashish R. Parikh |
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Title: |
Chief Financial Officer |
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Hersha Hospitality (NYSE:HT-D)
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