Kobe waterfront, 2015. 663highland, CC BY 2.5. Cropped.
Japan Hotel REIT plans to borrow 10.1 billion yen to replace bonds coming due this month, with most of the new financing structured as a green loan linked to three hotels in its portfolio.
The company said Nov. 13 that it expects to draw the two loans on Nov. 20 and use the proceeds to redeem bonds on Nov. 27. The plan changes the type of financing on its books, rather than increasing its total debt.
The larger loan, worth 9 billion yen, is being provided by Sumitomo Mitsui Banking Corporation, Mizuho Bank, MUFG Bank and Norinchukin Bank. MUFG will also provide a separate 1.1 billion yen loan.
Refinancing, not a new hotel purchase
Both loans are unsecured and unguaranteed, with principal due in a single payment on Sept. 30, 2031. Their initial pricing is one-month Japanese yen TIBOR, a short-term benchmark interest rate, plus 0.40 percentage points.
Japan Hotel REIT said it plans to use interest-rate swaps to fix the rates, but the terms of those swaps have not yet been set. The announced spread is therefore not a final fixed borrowing rate.
The bonds being repaid were issued in November 2016. One has a balance of 9 billion yen and the other 1.1 billion yen.
What makes the larger loan green
The 9 billion yen loan falls under the company’s green-finance framework. It refinances debt associated with acquiring Kobe Meriken Park Oriental Hotel, Oriental Hotel Tokyo Bay and Oriental Hotel Fukuoka Hakata Station, which the company said meet its green-building eligibility criteria.
That does not mean the company is buying those hotels now or that the loan proceeds are a newly announced renovation budget. The immediate purpose is to replace existing debt.
After the borrowing and bond repayment, total interest-bearing debt is expected to remain at 339.201 billion yen. Loans will rise by 10.1 billion yen while outstanding bonds fall by the same amount.
Japan Hotel REIT expects about 79% of its interest-bearing debt to carry fixed rates after the planned rate fixing and bond redemption. The new borrowing and the later bond repayment are still scheduled steps, not completed transactions.
JBizNews Desk | New York
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