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Chatham Lodging Trust closes new financings in connection with Cerberus JV

Florida-based hotel REIT Chatham Lodging Trust (NYSE: CLDT) has announced several events related to its 10.3% interest in a joint venture with affiliates of Cerberus Capital Management.

The joint venture was formed to acquire most of the former Innkeepers USA Trust hotel portfolio out of bankruptcy in October 2011, Chatham said. The joint venture recently refinanced its existing debt with a new USD 950m non-recourse loan with JPMorgan Chase Bank (NYSE: JPM), National Association.

Collateralised by the remaining 51, core hotels in the Innkeepers portfolio, the new, five-year, interest only loan, which is comprised of a two-year loan with three, one-year extension options, carries an interest rate of one month LIBOR plus 480 basis points.

The previous loans carried an average interest rate of approximately 6.74%. In connection with the loan closing, the joint venture pre-funded approximately USD 52m of capital expenditures related to future renovations at the joint venture´s hotels and USD 5m of other customary, lender required reserves.

Additionally, the firm´s Innkeepers joint venture has completed its non-core hotel disposition strategy with the sale of the last of its 13, non-core hotels last week. Total sales proceeds to the joint venture related to the sale of the 13 hotels were approximately USD 75m.

With the use of proceeds from the refinancing, non-core asset sales and cash generated from operating profits, the Innkeepers joint venture made distributions this month of approximately USD 118m to its partners, with Chatham receiving approximately USD 12m. At the time of establishment of the joint venture, Chatham invested USD 37m for its 10.3% interest in the Innkeepers joint venture.

To date, Chatham has received distributions of approximately USD 33.2m or approximately 90% of its original investment.

Chatham Lodging Trust owns interests in 74 hotels totaling 10,117 rooms/suites, comprised of 22 hotels it wholly owns with an aggregate of 3,022 rooms/suites in 12 states and the District of Columbia and holds a minority investment in two joint ventures that own 52 hotels with an aggregate of 7,095 rooms/suites.

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