Columbia Property Trust, Inc. (NYSE:CXP) Files An 8-K Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a RegistrantItem 2.03 below.
Item 1.01Entry into a Material Definitive Agreement.
The information required by Item 1.01 is included in Item 2.03 below and is incorporated by reference herein.
Item 2.03Creation of a Direct Financial Obligation or an Obligation Under an Off-Balance Sheet Arrangement.
On November 27, 2017, Columbia Property Trust Operating Partnership, L.P. (the “Operating Partnership”), a wholly-owned subsidiary of the Company, executed a borrowing agreement by and among the Operating Partnership, JPMorgan Chase Bank, N.A., as joint lead arranger and sole bookrunner; PNC Capital Markets LLC, Regions Capital Markets, SunTrust Robinson Humphrey, Inc., U.S. Bank National Association, and Wells Fargo Securities LLC, as joint lead arrangers; JPMorgan Chase Bank, N.A., as administrative agent; PNC Bank, National Association, Regions Bank, SunTrust Bank, U.S. Bank National Association and Wells Fargo Bank, National Association as documentation agents; and each of the financial institutions a signatory thereto, as lenders (the “Term Loan Agreement”). The Term Loan Agreement provides for a $300million unsecured loan which has a one-year term maturing November 27, 2018, with one six-month extension option (for a possible extension to May 24, 2019) subject to the Operating Partnership paying certain fees and the satisfaction of certain other conditions (the “Term Loan”). As of November 27, 2017, the Operating Partnership has $300 million of outstanding borrowings under the Term Loan.
Subject to customary conditions, including the absence of any default or event of default (each as defined in the Term Loan Agreement) and pro forma financial covenant compliance, the Operating Partnership has the ability to increase the amount of the Term Loan (each such increase, a “Term Loan Increase”) up to two times during the term of the Term Loan Agreement by up to an aggregate amount equal to $100 million. Each Term Loan Increase must be in an increment of not less than $25 million, and no lender shall have any obligation to participate in any Term Loan Increase.
At the Operating Partnership’s option, borrowings under the Term Loan bear interest at either (i) the alternate base rate (as defined in the Term Loan Agreement) plus an applicable margin based on five stated pricing levels ranging from 0.00% to 0.75% or (ii) the London Interbank Offered Rate plus an applicable margin based on five stated pricing levels ranging from 0.90% to 1.75%, in each case based on the Operating Partnership’s credit rating. Borrowings under the Term Loan currently bear interest at the London Interbank Offered Rate plus 1.10% based on current credit ratings.
The Term Loan may be prepaid by the Operating Partnership at any time without premium or penalty. In addition, cash proceeds from certain corporate financing activities must be used to repay the Term Loan; and a portion of the cash proceeds from asset sales and partial asset sales, including any payments from Allianz Real Estate to purchase additional joint venture interests, must also be used to repay the Term Loan.
The Term Loan Agreement contains representations and warranties, financial and other affirmative and negative covenants, events of defaults and remedies typical for this type of facility. The financial covenants in the Term Loan Agreement:
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(a) |
limit the ratio of secured debt to total asset value, as defined therein, to40%or less; |
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(b) |
require the fixed charge coverage ratio, as defined therein, to be at least 1.50:1.00; |
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(c) |
limit the ratio of debt to total asset value, as defined therein, to60%or less; |
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(d) |
require the ratio of unencumbered adjusted net operating income, as defined therein, to unsecured interest expense, as defined therein, to be at least 1.75:1.00; |
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(e) |
require the ratio of unencumbered asset value, as defined therein, to total unsecured debt, as defined therein, to be at least1.66:1.00; and |
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(f) |
require maintenance of certain minimum tangible net worth balances. |
The Term Loan Agreement also contains customary negative covenants applicable to the Company, the Operating Partnership and certain subsidiaries, including, among other things, restrictions on indebtedness, liens, restricted payments, sales of assets and transactions with affiliates, and customary events of default, including but not limited to, the nonpayment of principal or interest, material inaccuracy of representations and warranties, violations of covenants, cross-default to material indebtedness, bankruptcy and insolvency and material adverse judgments.
This description of the Term Loan Agreement is qualified in its entirety by reference to the complete terms and conditions of the agreement which will be attached as an exhibit to our Annual Report on Form 10-K for the period ended December 31, 2017.
About Columbia Property Trust, Inc. (NYSE:CXP)
Columbia Property Trust, Inc. operates as a real estate investment trust (REIT) for federal income tax purposes. The Company conducts business through Columbia Property Trust Operating Partnership, L.P. (Columbia Property Trust OP), which acquires, develops, owns, leases and operates real properties through subsidiaries or through joint ventures. The Company owns and operates commercial real estate properties. The Company invests in office properties. The Company owns over 30 office properties and approximately one hotel, which contains approximately 13.3 million square feet of commercial space, located in over 10 states and the District of Columbia. The Company’s portfolio consists of a combination of multi- and single-tenant office properties located in Central Business District (CBD) and suburban areas.
