BT Alex. Brown Inc. will structure and co-arrange a $1.2 billion refinancing for Starwood Lodging Trust, a real estate investment trust operated by Starwood Lodging Corp., a hotel management company.

Lehman Brothers Inc., BankBoston Corp., and Bank of Montreal are also co-arrangers of the refinancing, which will come to market in the next 30 to 60 days.

The loan will be used to retire about $650 million of Starwood's debt in four credit facilities and to fund the $470 million portfolio acquisition of 15 full-service hotels from Flatley/Tara Hotels, as well as for future acquisitions and general working capital purposes.

This year Starwood Lodging has spent $1.1 billion in 38 hotel acquisitions, according to Alan Schneid, vice president and corporate comptroller.

The new loan will not be used for Starwood's approximately $1.57 billion deal to buy Westin Hotels and Resorts, announced last Tuesday and expected to close in January.

That purchase, using a combination of cash, securities, and assumed debt, will be funded with either another refinancing or a new equity issue, said Mr. Schneid.

The new facility is structured as a $600 million, unsecured three-year revolving credit facility and a $600 million, three-year term loan.

The loan's spread is tied to Starwood's leverage ratio, with the lowest rate set at 100 basis points over the London interbank offered rate. The initial spread will be set at Libor plus 175 basis points, according to a statement from Starwood.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.