Franklin Street Properties Corp. (NYSEMKT:FSP) Files An 8-K Entry into a Material Definitive Agreement
Item 1.01. Entry into a Material Definitive
Agreement.
Credit Agreement with JPMorgan Chase Bank, N.A.
On November30, 2016, Franklin Street Properties Corp. (the
Company) entered into a Credit Agreement with JPMorgan Chase
Bank, N.A, as administrative agent and lender, and the other
lending institutions party thereto (Credit Agreement), to provide
for a single unsecured bridge loan borrowing on the closing date
in the aggregate principal amount of $150,000,000 (the Bridge
Loan). On November30, 2016, the Company drew down $150,000,000
under the Bridge Loan. The Bridge Loan has a two year term that
matures on November30, 2018.
The Bridge Loan bears interest at either (i)a number of basis
points over the Eurodollar Rate depending on the Companys credit
rating (135.0 basis points over the Eurodollar Rate at
November30, 2016) or (ii)a number of basis points over the base
rate depending on the Companys credit rating (35.0 basis points
over the base rate at November30, 2016). The actual margin over
the Eurodollar Rate or the base rate is determined based on the
Companys credit rating to the following grid:
|
LEVEL |
|
CREDITRATING |
|
EURODOLLAR RATE MARGIN |
|
BASERATE MARGIN |
|
|
I |
BBB/Baa2 (or higher) |
110.0 bps |
10.0 bps |
||||
|
II |
BBB-/Baa3 |
135.0 bps |
35.0 bps |
||||
|
III |
BBB-/Baa3 |
185.0 bps |
85.0 bps |
For purposes of the Bridge Loan, base rate means, for any day, a
fluctuating rate per annum equal to the greatest of: (i)JPMorgan
Chase Bank, N.A.s prime rate in effect on such day, (ii)the
greater of the Federal Funds Rate or the overnight bank funding
rate in effect on such day, plus 1/2 of 1.00% (but no less than
zero), and (iii)the one month Adjusted LIBOR based rate for such
day plus 1.00%. For purposes of the Bridge Loan, the Eurodollar
Rate means, for any interest period, the LIBO Rate for the
applicable interest period multiplied by the statutory reserve
rate, and in any event, the Eurodollar Rate shall not be less
than zero.
Based upon the Companys credit rating, as of November30, 2016,
the effective interest rate on the Bridge Loan was 1.975% for the
initial one month interest period.
The Credit Agreement contains customary affirmative and negative
covenants for credit facilities of this type, including
limitations with respect to indebtedness, liens, investments,
mergers and acquisitions, disposition of assets, changes in
business, certain restricted payments, the requirement to have
subsidiaries provide a guaranty in the event that they incur
recourse indebtedness and transactions with affiliates. The
Credit Agreement also contains financial covenants that require
the Company to maintain a minimum tangible net worth, a minimum
fixed charge coverage ratio, a maximum secured leverage ratio, a
maximum leverage ratio, a maximum unencumbered leverage ratio, a
minimum unsecured interest coverage ratio and a maximum ratio of
certain investments to total assets. The Credit Agreement
provides for customary events of default with corresponding grace
periods, including failure to pay any
principal or interest when due, certain cross defaults and a
change in control of the Company (as defined in the Credit
Agreement). In the event of a default by the Company, the
Administrative Agent may, and at the request of the requisite
number of lenders shall, declare all obligations under the
Credit Agreement immediately due and payable, and enforce any
and all rights of the lenders or Administrative Agent under the
Credit Agreement and related documents. For certain events of
default related to bankruptcy, insolvency, and receivership,
all outstanding obligations of the Company will become
immediately due and payable. The Company used the net proceeds
of the Bridge Loan to finance the acquisition of the Property
(as defined in Item 2.01) on December1, 2016 and for other
general business purposes.
Certain of the lenders party to the Credit Agreement, and their
respective affiliates, have performed, and may in the future
perform for the Company and its subsidiaries, various
commercial banking, investment banking, underwriting and other
financial advisory services, for which they have received, and
will receive, customary fees and expenses.
The Credit Agreement is attached to this Current Report on
Form8-K as Exhibit10.1 and is incorporated herein by reference.
The foregoing summary of the Credit Agreement is qualified in
its entirety by the complete text of the Credit Agreement.
Item 2.01. Completion of Acquisition
or Disposition of Assets.
On December1, 2016, FSP 600 17th Street LLC (the Buyer), a
wholly-owned subsidiary of the Company, completed the
acquisition of two interconnected 19 and 28-story ClassA office
towers containing an aggregate of approximately 613,527
rentable square feet of space in downtown Denver, Colorado (the
Property), to a real estate purchase and sale agreement (the
Agreement) from CCP BCSP Dominion Property LLC (the
Seller).There are no material relationships, other than in
respect of the Agreement, among the Buyer and the Seller, the
Company or any of the Companys affiliates.The Property, known
as Dominion Towers, is located at 600 17th Street, Denver,
Colorado. The purchase price of the Property was approximately
$154.3 million and was paid in cash by the Buyer to the Seller
at the closing. The purchase price was primarily funded from
the proceeds of the Bridge Loan with the balance paid from
existing cash on hand.
Item 2.03. Creation of a Direct
Financial Obligation or an Obligation under an Off-Balance
Sheet Arrangement of a Registrant.
The information contained above under Item 1.01 is incorporated
herein by reference.
Item7.01. Regulation FD
Disclosure.
On December2, 2016, the Company announced that it had acquired
the Property. The full text of the press release issued in
connection with the announcement is furnished as Exhibit99.1
hereto and is incorporated herein by reference.
The information contained in this Item7.01, including the
related information set forth in the press release attached as
Exhibit99.1 hereto and incorporated by reference herein, is
being furnished and shall not be deemed filed for purposes of
Section18 of the Securities
Exchange Act of 1934, as amended (the Exchange Act), or
otherwise subject to the liabilities of Section18 of the
Exchange Act. The information in this Item7.01 shall not be
incorporated by reference into any registration statement or
other document to the Securities Act of 1933, as amended, or
into any filing or other document to the Exchange Act, except
as otherwise expressly stated in any such filing.
Item 9.01. Financial Statements and
Exhibits.
(a)Financial Statements of Businesses Acquired.
The Company will file the required financial statements
relating to the acquisition of the Property under cover of
Form8-K/A no later than 71 calendar days after the date that
this Current Report was required to be filed.
(b)Pro Forma Financial Information.
The Company will file the required pro forma financial
information relating to the acquisition of the Property under
cover of Form8-K/A no later than 71 calendar days after the
date that this Current Report was required to be filed.
(c)Exhibits.
See ExhibitIndex attached hereto.
About Franklin Street Properties Corp. (NYSEMKT:FSP)
Franklin Street Properties Corp. is a real estate investment trust (REIT). The Company is focused on commercial real estate investments primarily in office markets. The Company’s segment is real estate operations. The Company owns and operates a portfolio of real estate consisting of approximately 40 office properties. The Company provides asset management, property management, property accounting, and investor and development services to its portfolio and certain of its Sponsored REITs through its subsidiaries, FSP Investments LLC and FSP Property Management LLC. The Company may make secured loans to Sponsored REITs in the form of mortgage loans or revolving lines of credit to fund construction costs, capital expenditures, leasing costs and for other purposes. Its properties include 678-686 Hillview Drive in Milpitas, California; 600 Forest Point Circle in Charlotte, North Carolina; 14151 Park Meadow Drive in Chantilly, Virginia, and 3625 Cumberland Boulevard in Atlanta, Georgia. Franklin Street Properties Corp. (NYSEMKT:FSP) Recent Trading Information
Franklin Street Properties Corp. (NYSEMKT:FSP) closed its last trading session 00.00 at 12.39 with 353,254 shares trading hands.
