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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): October 13,
2022
PEBBLEBROOK HOTEL TRUST
(Exact name of registrant as specified in its charter)
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Maryland |
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001-34571 |
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27-1055421 |
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(State or other jurisdiction |
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(Commission |
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(I.R.S. Employer |
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of incorporation) |
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File Number) |
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Identification No.) |
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4747 Bethesda Avenue, Suite 1100, Bethesda, Maryland
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20814 |
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(Address of principal executive offices) |
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(Zip Code) |
Registrant’s telephone number, including area code:
(240) 507-1300
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Not Applicable |
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Former name or former address, if changed since last
report |
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:
☐ Written
communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
☐ Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17
CFR 240.14a-12)
☐ Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange
Act (17 CFR 240.14d-2(b))
☐ Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange
Act (17 CFR 240.13e-4(c))
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Securities registered pursuant to Section 12(b) of the
Act: |
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Title of each class |
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Trading Symbol(s) |
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Name of each exchange on which registered |
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Common Shares, $0.01 par value per share |
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PEB |
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New York Stock Exchange |
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Series E Cumulative Redeemable Preferred Shares, $0.01 par
value |
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PEB-PE |
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New York Stock Exchange |
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Series F Cumulative Redeemable Preferred Shares, $0.01 par
value |
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PEB-PF |
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New York Stock Exchange |
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Series G Cumulative Redeemable Preferred Shares, $0.01 par
value |
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PEB-PG |
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New York Stock Exchange |
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Series H Cumulative Redeemable Preferred Shares, $0.01 par
value |
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PEB-PH |
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New York Stock Exchange |
Indicate by check mark whether the registrant is an emerging growth
company as defined in Rule 405 of the Securities Act of 1933
(§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange
Act of 1934 (§240.12b-2 of this chapter).
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.
☐
Item 1.01. Entry into a Material Definitive Agreement.
On October 13, 2022, Pebblebrook Hotel Trust (the “Company”), as
parent guarantor, Pebblebrook Hotel, L.P., as borrower (the
“Operating Partnership”), and certain subsidiaries of the Operating
Partnership, as guarantors, entered into that certain Fifth Amended
and Restated Credit Agreement with Bank of America, N.A. (“BofA”),
as administrative agent and L/C issuer, and certain other lenders
named therein (the “Primary Credit Agreement”). The Primary Credit
Agreement provides for a $650 million unsecured revolving credit
facility and three $460.0 million unsecured term loan facilities.
U.S. Bank National Association (“USB”) is syndication agent;
Capital One, National Association, PNC Bank, National Association,
TD Bank, N.A., Truist Bank, and Wells Fargo Bank, National
Association are documentation agents; Raymond James Bank, Regions
Bank and Sumitomo Mitsui Banking Corporation are senior managing
agents; Capital One, National Association, PNC Capital Markets LLC,
TD Bank, N.A., Truist Securities, Inc., U.S. Bank National
Association, Wells Fargo Securities, LLC and BofA Securities, Inc.
(“BofA Securities”) are joint lead arrangers;
and BofA Securities is sole bookrunner under the Primary Credit
Agreement. The Primary Credit Agreement amends and restates in its
entirety that certain Fourth Amended and Restated Credit Agreement,
dated as of October 13, 2017, among the Company, the Operating
Partnership, BofA and certain other lenders named therein, as
amended through December 9, 2021 (the “Fourth Amended and Restated
Credit Agreement”).
Pursuant to the Primary Credit Agreement, the Company and certain
subsidiaries of the Company guarantee to the lenders thereunder all
of the financial obligations (including indebtedness, capital
leases and guarantees) of the Operating Partnership and each other
guarantor. From time to time, the Operating Partnership may be
required to cause additional subsidiaries to become guarantors
under the Primary Credit Agreement.
The Primary Credit Agreement provides a $2.03 billion unsecured
borrowing capacity, composed of a $650 million unsecured revolving
credit facility, which matures on October 13, 2026, and a three
$460 million unsecured term loan facilities, which mature on
October 13, 2024, October 13, 2025 and October 13, 2027,
respectively. Subject to certain terms and conditions set forth in
the Primary Credit Agreement, the Operating Partnership (i) may
request additional lender commitments under any of the four
facilities of up to an additional aggregate of $970 million (for a
maximum aggregate borrowing capacity under the Primary Credit
Agreement of $3.0 billion) and (ii) may elect, for an additional
fee, to extend the maturity date of the revolving credit facility
by six months once or twice, for a maximum maturity date of October
13, 2027.
All borrowings under the $650 million unsecured revolving credit
facility will bear interest at a rate per annum equal to, at the
option of the Company, (i) Secured Overnight Financing Rate
(“SOFR”) plus 0.10% (the “SOFR Adjustment”) plus a margin that is
based upon the Company’s leverage ratio or (ii) the Base Rate
(which is defined as the greatest of the rate of interest as
publicly announced from time to time by BofA as its prime rate, the
Federal Funds Rate plus 0.50%, Term SOFR plus the SOFR Adjustment
plus 1.00%, and 1.00%) plus a margin that is based on the Company’s
leverage ratio. The Primary Credit Agreement also permits the
issuance of letters of credit, which will bear interest at a rate
equal to that borne by balances on the revolving credit facility.
The margins for revolving credit facility loans range in amount
from 1.45% to 2.50% for SOFR-based loans and 0.45% to 1.50% for
Base Rate-based loans, depending on the Company’s leverage
ratio.
In addition to the $650 million unsecured revolving credit
facility, the Primary Credit Agreement also provides for three $460
million unsecured term loan facilities. On October 13, 2022, the
Operating Partnership borrowed the full $1.38 billion in term loans
under the Primary Credit Agreement. Borrowings under the term loan
facilities will bear interest at a rate per annum equal to, at the
option of the Company, (i) SOFR plus the SOFR Adjustment plus a
margin that is based upon the Company’s leverage ratio or (ii) the
Base Rate plus a margin that is based on the Company’s leverage
ratio. The margins for term loans range in amount from 1.40% to
2.45% for SOFR-based loans and 0.40% to 1.45% for Base Rate-based
loans, depending on the Company’s leverage ratio.
There are no prepayment penalties under the Primary Credit
Agreement.
If the Company or the Operating Partnership attains an
investment-grade debt rating from either Moody’s Investors Service,
Inc. (“Moody’s”) or S&P Global Ratings, a subsidiary of S&P
Global, Inc. (“S&P”), the Company may elect to convert the
pricing structure under the Primary Credit Agreement to be based on
such rating. In that event, the margins for revolving credit
facility loans will range in amount from 0.725% to 1.40% for
SOFR-based loans and 0.00% to 0.40% for Base Rate-based loans,
depending on such rating. The margins for term loans will range in
amount from 0.80% to 1.60% for SOFR-based loans and 0.00% to 0.60%
for Base Rate-based loans, depending on such rating. In either
case, borrowings under the revolving credit facility will also
incur a facility fee in an amount from 0.125% to 0.30% depending on
such rating.
In addition to the interest payable on amounts outstanding under
the Primary Credit Agreement, the Company is required to pay an
amount equal to 0.20% of the unused portion of the revolving credit
facility if the aggregate usage of the such facility is greater
than or equal to 50% of such facility and 0.30% if the average
usage of such facility is less than 50% of such
facility.
The Company’s ability to borrow under the Primary Credit Agreement
is subject to its ongoing compliance with a number of customary
financial and other covenants, including:
•a
maximum leverage ratio of 7.25:1.00 (but until the Operating
Partnership’s outstanding senior unsecured notes are paid off or
the note purchase and guarantee agreement governing such notes is
amended to provide for such maximum leverage ratio, it will be
6.75:1.00 (or up to 7.00:1.00 for up to four consecutive quarters
one time during the term of the agreement));
•a
maximum secured recourse debt ratio of 5% (or up to 10% for up to
four consecutive quarters one time during the term of the
agreement);
•a
maximum percentage of secured debt to total asset value of
45%;
•a
minimum fixed charge coverage ratio of 1.50:1.00;
•a
maximum unsecured interest coverage ratio of 2.0:1.0;
•a
minimum tangible net worth; and
•a
maximum ratio of unsecured debt to total unencumbered asset value
of 60% (or 65% for up to three consecutive quarters up to three
non-consecutive times during the term of the
agreement).
The Primary Credit Agreement contains representations, warranties,
covenants, terms and conditions customary for transactions of this
type, including 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
Primary 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 under the agreement
to exercise all rights and remedies available to them with respect
to the collateral.
The foregoing summary of the material provisions of the Primary
Credit Agreement is not complete and is qualified in its entirety
by reference to the copy of the Primary Credit Agreement which is
filed as Exhibit 10.1 to this Current Report on Form
8-K.
As of October 13 2022, under the $650 million unsecured revolving
credit facility the Company had no outstanding borrowings and $12.7
million of outstanding letters of credit.
In connection with entering into the Primary Credit Agreement,
prior notes evidencing term loans having an aggregate outstanding
balance of $1.4067 billion were canceled and the Operating
Partnership executed new notes evidencing three $460 million term
loans, evidencing an aggregate outstanding balance of $1.38
billion, allocated among the lenders of the Primary Credit
Agreement in accordance with the terms of such credit agreement, in
effect extending their maturities.
The cancellation of prior notes included notes evidencing a $300.0
million term loan that was outstanding under the Fourth Amended and
Restated Credit Agreement; a $996.7 million term loan that was
outstanding under a Credit Agreement, dated as of October 31, 2018,
among Pebblebrook Hotel L.P., as the borrower, Pebblebrook Hotel
Trust, as the parent REIT and a guarantor, certain subsidiaries of
the borrower, as guarantors, Bank of America, N.A., as
administrative agent, and the other lenders party thereto, as
amended through December 9, 2021; and a $110 million term loan that
was outstanding under a Credit Agreement, dated as of October 13,
2017, among the Operating Partnership, the Company, certain
subsidiaries of the Operating Partnership, Capital One, National
Association, as administrative agent, and the other lenders party
thereto, as amended through December 9, 2021. These three term
loans were paid off in full on October 13, 2022.
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 with respect to the Primary Credit Agreement, and the
Credit Facility and term loans made thereunder, is hereby
incorporated by reference into this Item 2.03.
Item 7.01. Regulation FD Disclosure.
On October 13, 2022, the Company issued a press release announcing
the Company’s refinancing made in connection with entering into the
agreement described under Item 1.01 of this Current Report on Form
8-K. A copy of that press release is furnished as Exhibit 99.1 to
this Current Report on Form 8-K and is hereby incorporated herein
by reference.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
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Exhibit No. |
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Description |
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Press release regarding refinancing of credit facilities issued
October 14, 2022. |
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Fifth Amended and Restated Credit Agreement, dated as of October
13, 2022, among the Operating Partnership, as the borrower, the
Registrant, as the parent REIT and a guarantor, certain
subsidiaries of the borrower, as guarantors, Bank of America, N.A.,
as administrative agent and L/C issuer, and the other lenders party
thereto. |
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SIGNATURES
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 hereunto duly
authorized.
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PEBBLEBROOK HOTEL TRUST |
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October 14, 2022 |
By: |
/s/ Raymond D. Martz |
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Name: |
Raymond D. Martz |
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Title: |
Executive Vice President, Chief Financial Officer, Treasurer and
Secretary |
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