Extension of Debt Covenant Suspension Period
As previously disclosed, on July 27, 2020, Pennsylvania Real Estate Investment Trust (“PREIT”), PREIT Associates, L.P. and PREIT-RUBIN, Inc. (collectively with PREIT and PREIT Associates, L.P., the “Borrower”) entered into (a) a Seventh Amendment to Seven-Year Term Loan (the “7-Year Term Loan Amendment”), which amends that certain Seven-Year Term Loan Agreement, dated January 8, 2014 (as amended, the “7-Year Term Loan”) with Wells Fargo Bank, National Association and the other financial institutions signatory thereto and (b) a Second Amendment to Amended and Restated Credit Agreement (together with the 7-Year Term Loan Amendment, the “Loan Amendments”), which amends that certain Amended and Restated Credit Agreement, dated May 24, 2018 (together with the 7-Year Term Loan, the “Loan Agreements”) with Wells Fargo Bank, National Association and the other financial institutions signatory thereto (the “Lenders”). The Loan Amendments suspended certain debt covenants from June 30, 2020 until August 31, 2020, and provided for an extension of the suspension period to September 30, 2020 if, prior to August 31, 2020, a secured term loan had become effective and a non-binding term sheet for further amendments to the Loan Agreements had been agreed, provided that the Borrower continues to work in good faith to close such further amendments. Effective August 30, 2020, the conditions for extending the suspension period to September 30, 2020 have been satisfied. As previously disclosed, on August 11, 2020, the Borrower entered into a Credit Agreement with Wells Fargo Bank, National Association and the financial institutions signatory thereto and their assignees for a secured term loan facility allowing for borrowings up to $30 million, which matures on the earlier of September 30, 2020 and the date the obligations thereunder have been accelerated (the “Secured Term Loan”).
On August 30, 2020, the Borrower agreed to a non-binding term sheet with the Lenders for further amendments to the Loan Agreements, the Borrower’s agreement to which was also an obligation under the Secured Term Loan. The Borrower continues to work with the Lenders to negotiate and finalize definitive documentation for further amendments to the Loan Agreements in an effort to provide further liquidity and to ensure continued compliance with its obligations following the end of the extended suspension period.
Termination of Sale-Leaseback Transaction
PREIT had previously disclosed that it had entered into an agreement for the sale-leaseback of five properties, which transaction was subject to conditions, including the completion of due diligence that had been delayed, and was not expected to close before 2021 due to the effects of COVID-19 on business operations and availability of financing. As a result of PREIT’s election not to extend the due diligence period under the agreement, effective as of August 26, 2020, the agreement has been terminated.
Forward Looking Statements
This current report contains certain forward-looking statements that can be identified by the use of words such as “anticipate,” “believe,” “estimate,” “expect,” “project,” “intend,” “may” or similar expressions. Forward-looking statements relate to expectations, beliefs, projections, future plans, strategies, anticipated events, trends and other matters that are not historical facts. These forward-looking statements reflect our current views about future events, achievements and results and are subject to risks, uncertainties and changes in circumstances that might cause future events, achievements