Summit Hotel Secures $275M Term Loan Facility

The new facility bolsters Summit’s capital flexibility with attractive interest terms and strict covenant controls.

April 03, 2025

New Facility Expands Flexibility and Funding Options

Summit Hotel Properties has added fresh financial firepower to its balance sheet. On March 27, the company’s operating partnership closed a $275 million unsecured delayed draw term loan facility, giving it added flexibility to manage debt and fund general corporate needs. The facility includes an accordion option that could expand the total commitment to $325 million.

Here’s how it works: Summit can draw funds on its own schedule through March 1, 2026. The loan matures in March 2028, but two optional one-year extensions are built in—meaning the company could stretch it through March 2030 if conditions are met.

Interest Structure Tied to Market Benchmarks

The interest terms are structured to move with the market. Summit can choose between:

• Daily or Term SOFR(plus a 0.10% adjustment), or


• A base rate tied to the highest of three short-term benchmarks

In both cases, the margin adjusts based on the company’s leverage ratio. There’s also a 0.25% annual fee on any undrawn portion of the facility, along with standard administrative costs.

Covenants and Compliance Framework

Financial covenants set the guardrails. These include:

• Maximum leverage ratio: 7.25x


• Minimum unsecured interest coverage ratio: 2.0x


• Maximum secured leverage: 45% of total asset value


• Maximum secured recourse leverage: 10% of total asset value


• Maximum unsecured leverage: 60% of unencumbered asset value, with a one-time increase to 65% for four quarters


• Minimum tangible net worth and minimum unencumbered asset count

The agreement also limits investments, liens, and structural changes like mergers. Default triggers cover the standard ground: missed payments, covenant breaches, and insolvency.

For Summit, the new facility locks in access to capital on flexible terms. It supports their ability to move quickly, whether refinancing existing obligations or staying ready for what’s next. With a long runway and clear conditions, the company has more tools at its disposal—and more control over how and when to use them.