Item 1.01. Entry into a Material Definitive Agreement.
On July 25, 2022, the Company, as borrower, and certain of its subsidiaries, as guarantors, entered into an amendment and restatement of its then existing $850,000,000 unsecured credit facility with Bank of America, N.A., as administrative agent, and the lenders party thereto (the “Credit Agreement”), increasing the borrowing capacity and extending the maturity dates. The Credit Agreement provides for: (i) a term loan facility of $275,000,000 with a maturity date of July 25, 2027; (ii) a term loan facility of up to $300,000,000 with a maturity date of January 31, 2028 (including a $150,000,000 delayed draw option until 180 days from closing); and (iii) a revolving credit facility of $650,000,000 with an initial maturity date of July 25, 2026 (which may be extended up to one year subject to certain conditions). The Credit Agreement includes an accordion feature in which the amount of the total credit facility may be increased from $1,225,000,000 to $1,500,000,000.
The terms of the Credit Agreement are generally similar to the Company’s previous $850,000,000 credit agreement. The amendment includes: (i) a transition in reference rate from LIBOR to the Secured Overnight Financing Rate (“SOFR”); (ii) a reduced margin ranging from 1.35% to 2.25% over an adjusted SOFR rate depending upon the Company’s leverage ratio, as calculated under the terms of the Credit Agreement; and (iii) the unused fee on the revolving credit facility remained the same at a per annum fee of 0.20% or 0.25% (depending on usage).
At closing, the Company borrowed $475,000,000 under the term loans, repaid the $425,000,000 outstanding under the term loans of the previous credit facility and repaid $50,000,000 outstanding under the current revolving credit facility.
Similar to the previous credit agreement, the Credit Agreement contains customary mandatory prepayment requirements, affirmative covenants, negative covenants and events of default, which, following any applicable grace period, would permit the lenders to, among other things, declare the principal, accrued interest and other obligations of the Company under the Credit Agreement to be immediately due and payable. The Credit Agreement requires the Company and its subsidiaries to comply with various covenants, including covenants restricting liens, indebtedness, investments, mergers and asset sales. Certain of the financial maintenance covenants in the Credit Agreement include:
|
• |
a ratio of consolidated total debt to consolidated EBITDA of not more than 7.25 to 1.00; |
|
• |
a ratio of consolidated secured debt to consolidated total assets of not more than 45%; |
|
• |
a minimum consolidated tangible net worth of $3.4 billion (plus 75% of the net cash proceeds from issuances and sales of equity interests occurring after the closing date, subject to adjustment); |
|
• |
a ratio of adjusted consolidated EBITDA to consolidated fixed charges of not less than 1.50 to 1.00 for the trailing four full quarters; |
|
• |
a ratio of net operating income from unencumbered properties satisfying certain criteria specified in the Credit Agreement to unsecured indebtedness implied interest expense of not less than 2.00 to 1.00 for the trailing four full quarters; |
|
• |
a ratio of consolidated unsecured indebtedness to unencumbered asset value of not more than 60% (subject to a higher level in certain circumstances); and |
|
• |
a ratio of consolidated secured recourse debt to consolidated total asset value of not more than 10%. |
The foregoing summary does not purport to be a complete statement of the terms and conditions under the Credit Agreement, and is qualified in its entirety by the full terms and conditions of the Credit Agreement which is filed as Exhibit 10.1 to this current report on Form 8-K and incorporated herein by reference.