Pennsylvania Real Estate Investment Trust (NYSE:PEI-B) Files An 8-K Entry into a Material Definitive AgreementItem 1.01 Entry into a Material Definitive Agreement
Amendment of the 2014 7-Year Term Loan Agreement
On June 5, 2018, Pennsylvania Real Estate Investment Trust (“PREIT”), PREIT Associates, L.P. (“PREIT Associates”) and PREIT-RUBIN, Inc. (“PRI” and, collectively with PREIT and PREIT Associates, the “Borrower”) entered into the Fifth Amendment (the “Amendment”) to the Seven-Year Term Loan Agreement (as amended, the “7-Year Term Loan”) with Wells Fargo Bank, National Association, and the other financial institutions signatory to the Amendment. The Amendment was entered into to make certain provisions of the 7-Year Term Loan consistent with the Amended and Restated Credit Agreement entered into by the Borrower, Wells Fargo Bank, National Association, U.S. Bank National Association, Citizens Bank, N.A., and the other financial institutions signatory thereto, dated May 24, 2018 (the “Credit Agreement”). Among other things, the Amendment (i) adds and updates certain definitions and provisions, including tax-related provisions, relating to foreign lenders under the 7-Year Term Loan, (ii) updates the definition of “Existing Credit Agreement” to refer to the Credit Agreement, which updates the cross defaults between the 7-Year Term Loan and the Credit Agreement (replacing such cross defaults to the agreements the Credit Agreement replaced), (iii) adds and amends provisions consistent with those provided in the Credit Agreement for determining an alternative rate of interest to LIBOR, when and if required, and (iv) adjusts or eliminates some of the covenants applicable to the Borrower. The Amendment does not extend the maturity date of the 7-Year Term Loan, or change the amounts that can be borrowed thereunder.
Under the Amendment, PREIT is required to maintain (i) Tangible Net Worth in excess of $1,474,127,554, plus 75% of proceeds from equity issuances after March 31, 2018, and (ii) on a consolidated basis, minimum Unencumbered Debt Yield of (a) 11.0% from the Fifth Amendment Effective Date through and including June 30, 2020, (b) 11.25% any time after June 30, 2020 through and including June 30, 2021, and (c) 11.50% at any time thereafter. In addition, certain restrictions regarding (i) the Borrower’s investments in unimproved real estate and predevelopment costs, other Persons, mortgages and certain Consolidation Exempt Entities, and (ii) investment in properties under development, were eliminated. These changes are consistent with the covenants in the Credit Agreement. The 7-Year Term Loan contains other affirmative and negative covenants customarily found in facilities of this type that remain unchanged under the Amendment and that are described in PREIT’s Annual Report on Form 10-K, as amended, for the year ended December 31, 2017.