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Hospitality Investors Trust Secures $1 Billion in Loans

Hospitality Investors Trust Inc., a publicly registered non-traded REIT formerly known as American Realty Capital Hospitality Trust, has entered into new mortgage and mezzanine loans totaling $1.04 billion on 92 of the company’s hotel properties.

Hospitality Investors Trust Inc., a publicly registered non-traded REIT formerly known as American Realty Capital Hospitality Trust, has entered into new mortgage and mezzanine loans totaling $1.04 billion on 92 of the company’s hotel properties.

The 92-Pack Loans comprise a mortgage loan, a senior mezzanine loan, and a junior mezzanine loan from five lenders including Morgan Stanley Bank, Citigroup Real Estate Funding, Deutsche Bank, Goldman Sachs Mortgage Company, and JPMorgan Chase Bank.

The mortgage loan has a $870 million principal and bears interest at one-month LIBOR plus 2.14 percent. Collateral includes mortgages on 92 of the company’s hotel properties.

The senior mezzanine loan has a $100 million principal and bears interest at one-month LIBOR plus 5.60 percent. Collateral includes pledge of ownership interests in the company’s subsidiaries that own and operate the 92 hotel properties.

The junior mezzanine loan has a $70 million principal and bears interest at one-month LIBOR plus 8.50 percent. Collateral includes pledge of ownership interests in the borrowers and leasehold pledgors under the senior mezzanine loan.

The three loans are interest only with the principal due at maturity on November 2021, with three one-year extension options.

The weighted average interest rate per year on the loans is one-month LIBOR plus 2.90 percent, with the LIBOR portions of the interest rates capped at 4.00 percent.

Hospitality Investors Trust used $961.1 million of the loan proceeds to repay its existing mortgage and mezzanine debt on the 92 hotel properties; $25 million was used to repay a portion of the outstanding principal under a $310.0 million term loan encumbering 28 of the company’s other hotel properties; and $10 million was deposited into a reserve account with the lenders to fund property improvement plans required by franchisors of the 92 hotel properties.

The loans generated approximately $25 million of additional working capital to the REIT.

In other Hospitality Investors Trust news, its chief financial officer and treasurer, Edward Hoganson, plans to resign from the company in order to pursue a leadership opportunity with an unnamed hotel management company.

As previously reported, Hoganson’s departure date has not yet been determined, and the company is currently evaluating candidates and expects to appoint a new CFO and treasurer prior to his last day of employment.

Hospitality Investors Trust invests in select-service lodging properties in North America branded by premium national hotel brands. The REIT’s offering was declared effective in January 2014 and suspended sales activities in November 2015 after raising $903 million in investor equity. As of the fourth quarter of 2018, the company’s $2.6 billion portfolio was comprised of 144 properties. The company severed ties with its external advisor, an affiliate of AR Global, and became self-managed on March 31, 2017.

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