DiamondRock Hospitality Company has amended its existing approximately $170.4-million mortgage loan secured by The Lexington New York City to reduce its costs of borrowing and extend the term of the loan.
The amended loan reflects the hotel's conversion to the Autograph Collection and its underlying operations. The loan bears interest at an initial floating rate of LIBOR plus 275 basis points, but features a pricing grid that will further reduce the spread to as low as 175 basis points upon achieving certain hotel cash flow hurdles. The reduced borrowing costs are expected to save the Company between $1.5 million and $2.0 million in annual interest expense.
The amended loan also benefits the Company by extending the potential term of the loan by approximately 30 months to October 2019. The loan has a five-year term, including two one-year extension options available to the Company upon satisfying certain financial and other conditions.
"This loan amendment allowed DiamondRock to take advantage of the current low rate interest rate environment and favorable lending conditions. Our strong relationships with the existing lenders facilitated this advantageous transaction," stated Sean Mahoney, Executive Vice President and Chief Financial Officer of the Company.
Thirteen of the company's 27 hotels remain unencumbered by property-specific mortgage debt.