Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance
Sheet Arrangement of
a Registrant.
On April 24, 2017, Boston Properties Limited Partnership (the Company), a Delaware limited partnership
and the entity through which Boston Properties, Inc. conducts substantially all of its business, amended and restated its revolving credit agreement (as amended and restated, the 2017 Credit Facility). Among other things, the amendment
and restatement (1) increased the total commitment of the revolving line of credit (the Revolving Facility) from $1.0 billion to $1.5 billion, (2) extended the maturity date from July 26, 2018 to April 24,
2022, (3) reduced the per annum variable interest rates, and (4) added a $500.0 million delayed draw term loan facility (the Delayed Draw Facility) that permits the Company, until the first anniversary of the closing date,
to draw upon up to four times a minimum of $50.0 million (or, if less, the unused delayed draw term commitments), provided that amounts drawn under the Delayed Draw Facility and subsequently repaid may not be borrowed again. In addition, the
Company may increase the total commitment under the 2017 Credit Facility by up to $500.0 million through increases in the Revolving Facility or the Delayed Draw Facility, or both, subject to syndication of the increase and other conditions.
At the Companys option, loans under the Revolving Facility and Delayed Draw Facility will bear interest at a rate per annum equal
to (1) (a) in the case of loans denominated in Dollars, Euro or Sterling, LIBOR, and (b) in the case of loans denominated in Canadian Dollars, CDOR, in each case, plus a margin ranging from 77.5 to 155 basis points for the Revolving Commitment
and 85 to 175 basis points for the Delayed Draw Facility, based on the Companys credit rating or (2) an alternate base rate equal to the greatest of (x) the Administrative Agents prime rate, (y) the Federal Funds rate plus
0.50% or (z) LIBOR for a one-month period plus 1.00%, in each case, plus a margin ranging from 0 to 55 basis points for the Revolving Facility and 0 to 75 basis points for the Delayed Draw Facility, based on the Companys credit rating.
The 2017 Credit Facility also contains a competitive bid option for up to 65% of the Revolving Facility that allows banks that are part of the lender consortium to bid to make loan advances to the Company at a reduced interest rate.
In addition, the Company is obligated to pay (1) in quarterly installments a facility fee on the total commitment under the Revolving
Facility at a rate per annum ranging from 0.10% to 0.30% based on the Companys credit rating, (2) an annual fee on the undrawn amount of each letter of credit equal to the LIBOR margin on the Revolving Facility and (3) a fee on the
unused commitments under the Delayed Draw Facility equal to 0.15% per annum.
Based on the Companys current credit rating,
(1) the applicable Eurocurrency margins for the Revolving Facility and Delayed Draw Facility are 87.5 basis points and 95 basis points, respectively, (2) the alternate base rate margin is 0 basis points for each of the Revolving Facility
and Delayed Draw Facility and (3) the facility fee on the Revolving Facility commitment is 0.15% per annum.
The 2017 Credit Facility
contains customary representations and warranties, affirmative and negative covenants and events of default provisions, including failure to pay indebtedness, breaches of covenants, and bankruptcy and other insolvency events, which could result in
the acceleration of all amounts and cancellation of all commitments outstanding under the Credit Agreement. Among other covenants, the 2017 Credit Facility requires that BPLP maintain on an ongoing basis: (1) a leverage ratio not to exceed 60%,
however, the leverage ratio may increase to no greater than 65% provided that it is reduced back to 60% within one year, (2) a secured debt leverage ratio not to exceed 55%, (3) a fixed charge coverage ratio of at least 1.40, (4) an unsecured
debt leverage ratio not to exceed 60%, however, the unsecured debt leverage ratio may increase to no greater than 65% provided that it is reduced to 60% within one year, (5) an unsecured debt interest coverage ratio of at least 1.75 and
(6) limitations on permitted investments.
2
The 2017 Unsecured Line of Credit was arranged by Merrill Lynch, Pierce, Fenner & Smith
Incorporated and JPMorgan Chase Bank, N.A., as Joint Lead Arrangers and Joint Bookrunners, with Bank of America, N.A., as Administrative Agent and lender, JPMorgan Chase Bank, N.A., as Syndication Agent and lender, The Bank of New York Mellon,
Deutsche Bank Securities Inc., Morgan Stanley Senior Funding, Inc., PNC Bank National Association, U.S. Bank National Association and Wells Fargo Bank, N.A., as Documentation Agents, Bank of Nova Scotia, Citibank, N.A., Mizuho Bank, Ltd. and TD
Bank, N.A., as Managing Agents, Branch Banking and Trust Company, Fifth Third Bank and SunTrust Bank as
Co-Agents,
and a syndicate of banks named therein as lenders.
The foregoing summary is qualified in its entirety by reference to the Eighth Amended and Restated Credit Agreement, which is filed as Exhibit
10.1 to this Current Report on Form
8-K
and incorporated by reference herein.
Dr. Jacob A. Frenkel, a director of Boston Properties, Inc., is the Chairman of JPMorgan Chase International, which is an affiliate
of JPMorgan Chase Bank, N.A. David A. Twardock, a director of Boston Properties, Inc., is a member of the Board of Directors of Morgan Stanley Bank, N.A., which is an affiliate of Morgan Stanley Senior Funding, Inc.