Sunstone Hotel Investors was able to shave 25 basis points off its bank debt in an opportunistic refinancing, but CFO Jon Kline said the company is never satisfied with pricing. "It should always be cheaper."
Pricing on the $200 million revolver, based on the ratio of total debt to EBITDA, is set on a grid ranging from the current rate of LIBOR plus 1 1/2% to LIBOR plus 2 1/2%. The revolver has a $100 million accordion feature and is $50 million larger than the previous facility.
The company has doubled in size since its October 2004 initial public offering, Kline said, which has helped it grab better pricing. The company has predicted revenue of $986 million for 2006, compared to actual revenue of $489.6 million in 2004.
Several banks showed interest in joining the facility, according to Kline, but Sunstone added only KeyBank to the syndicate. "KeyBank was very proactive over the past year in showing us ideas on the credit facility and demonstrated a commitment to being involved," he said. Citigroup, which had led the previous facility, along with Wachovia Securities acted as joint lead arrangers on this deal.