WASHINGTON REAL ESTATE INVESTMENT TRUST (NYSE:WRE) Files An 8-K Entry into a Material Definitive Agreement

WASHINGTON REAL ESTATE INVESTMENT TRUST (NYSE:WRE) Files An 8-K Entry into a Material Definitive Agreement
Item 1.01 Entry into a Material Definitive Agreement.

Story continues below

OnMarch29, 2018, Washington Real Estate Investment Trust (“Washington REIT”) entered into an Amended and Restated Credit Agreement (the “Credit Agreement”) with Wells Fargo Bank, National Association, as administrative agent (the “Agent”), and the financial institutions party thereto as lenders (the “Lenders”) and agents, which provides for aggregate revolving loan commitments of $700million (the “Revolving Credit Facility”), the continuation of the existing unsecured term loan facility of $150million (the “Tranche A Term Loan Facility”) and an additional unsecured term loan facility of $250million (the “Tranche B Term Loan Facility”). The Credit Agreement amends and restates that certain Credit Agreement (as amended, the “Existing Credit Agreement”), dated as of June23, 2015, among Washington REIT, Wells Fargo Bank, National Association, as administrative agent, and the financial institutions party thereto as lenders and agents, which provided for aggregate revolving loan commitments of $600million and the Tranche A Term Loan Facility (in the amount of $150 million). The Tranche B Term Loan Facility under the Credit Agreement will increase and replace the $150million unsecured term loan facility under that certain Term Loan Agreement (the “Prior Term Loan Agreement”), dated as of July22, 2016, among Washington REIT, Capital One, National Association, as administrative agent, and the financial institutions party thereto as lenders and agents.

The Credit Agreement includes the option to increase the revolving loan commitments or add term loans under the Credit Agreement to up to $1.5billion in the aggregate to the extent the lenders (from the syndicate or otherwise) agree to provide additional revolving loan commitments or term loans. The Revolving Credit Facility will mature on March 29, 2022, unless extended to one or both of the two six-month extension options provided therein. The exercise of an extension option requires the payment of a fee of 0.0625% on the extended revolving loan commitments for the first extension and 0.075% on the extended revolving loan commitments for the second extension, and is subject to certain other customary conditions. The Tranche A Term Loan Facility will mature on March15, 2021 and the Tranche B Term Loan Facility will mature on July21, 2023. The Credit Agreement also provides Washington REIT with the ability to obtain letters of credit of up to $60million in the aggregate. As ofMarch29, 2018, $150million of the Tranche A Term Loan Facility, $250million of the Tranche B Term Loan Facility, and revolving loans in an aggregate principal amount of approximately $260million were outstanding under the Credit Agreement.

No subsidiaries of Washington REIT are currently required to guarantee Washington REIT’s obligations under the Credit Agreement. Subsidiaries of Washington REIT may in the future be required to guarantee Washington REIT’s obligations under the Credit Agreement if any such subsidiary (a)guarantees the indebtedness of Washington REIT or another subsidiary of Washington REIT (excluding, among other things, guarantees of certain indebtedness in an aggregate principal amount not in excess of $200 million) or (b)owns a property included in the determination of Washington REIT’s unencumbered pool value and incurs any recourse indebtedness.

Borrowings under the Revolving Credit Facility will bear interest, at Washington REIT’s option, at a rate of either LIBOR plus a margin ranging from 0.775% to 1.55% (depending on Washington REIT’s credit rating) or the base rate plus a margin ranging from 0.00% to 0.55% (based upon Washington REIT’s credit rating). Loans under the Tranche A Term Loan Facility will bear interest, at Washington REIT’s option, at a rate of either LIBOR plus a margin ranging from 0.90% to 1.75% (depending on Washington REIT’s credit rating) or the base rate plus a margin ranging from 0.00% to 0.75% (based upon Washington REIT’s credit rating). Loans under the Tranche B Term Loan Facility will bear interest, at Washington REIT’s option, at a rate of either LIBOR plus a margin ranging from 0.85% to 1.75% (depending on Washington REIT’s credit rating) or the base rate plus a margin ranging from 0.00% to 0.75% (based upon Washington REIT’s credit rating). The base rate is the highest of the Agent’s prime rate, the federal funds rate plus 0.50% and the LIBOR market index rate plus 1.0%. In addition, the Credit Agreement requires the payment of a facility fee equal to 0.10% to 0.30% (depending on Washington REIT’s credit rating) on the $700million committed capacity in respect of the Revolving Credit Facility, without regard to usage.

The Credit Agreement contains representations, financial and other affirmative and negative covenants that are similar to the Existing Credit Agreement and generally customary for credit facilities of this type. The Credit Agreement requires that Washington REIT comply with various covenants, including covenants restricting liens on

properties included in the determination of Washington REIT’s unencumbered pool value, investments, mergers, affiliate transactions, asset sales and the payment of dividends following an event of default. In addition, the Credit Agreement requires that Washington REIT satisfy certain financial maintenance covenants, including:

ratio of total debt to total asset value of not more than 0.60 to 1.00 (subject to a higher level following material acquisitions);
ratio of adjusted EBITDA to fixed charges of not less than 1.50 to 1.00;
ratio of secured indebtedness to total asset value of not more than 0.40 to 1.00;
ratio of net operating income from unencumbered properties satisfying certain criteria specified in the Credit Agreement to interest expense on unsecured indebtedness of not less than 1.75 to 1.00; and
ratio of unsecured indebtedness to the unencumbered pool value of properties satisfying certain criteria specified in, and valued per the terms of, the Credit Agreement of not more than 0.60 to 1.00 (subject to a higher level following material acquisitions).

The Credit Agreement also includes customary events of default, the occurrence of which, following any applicable grace period, would permit the lenders to, among other things, declare the principal, accrued interest and other obligations of Washington REIT under the Credit Agreement to be immediately due and payable.

Washington REIT also has entered into interest rate swap arrangements in relation to the full amount of the Tranche B Term Loan Facility, with the effect that Washington REIT will pay a fixed interest rate of approximately 2.31% per annum on the existing $150million portion of such Tranche B Term Loan Facility and 3.71% per annum on the new $100million portion of such Tranche B Term Loan Facility (in each case, based on the Washington REIT’s current credit rating). Swap arrangements with respect to the existing $150million portion of such Tranche B Term Loan Facility are now in effect and swap arrangements with respect to the additional $100million portion of such Tranche B Term Loan Facility will take effect on June29, 2018 and, in each case, such swap arrangements will expire on the maturity date of the Tranche B Term Loan Facility.

From time to time, the Washington REIT has had customary commercial and/or investment banking relationships with Wells Fargo Bank, National Association, PNC Bank, National Association, SunTrust Bank, Goldman Sachs Bank USA, Capital One, National Association, Agent, US Bank National Association, and/or certain of their respective affiliates, counterparties to the interest rate swap arrangements.

The foregoing summary of the Credit Agreement is qualified in its entirety by reference to the Credit Agreement, a copy of which is attached as Exhibit 10.1 and incorporated herein by reference.

Item 1.01 Termination of a Material Definitive Agreement.

In connection with Washington REIT’s entry into the Credit Agreement, on March29, 2018, the Prior Term Loan Agreement was terminated effective March29, 2018 in connection with the replacement of the obligations owing under the Prior Term Loan Agreement by the Tranche B Term Loan Facility. The Prior Term Loan Agreement was filed as Exhibit 10.54 to Washington REIT’s Quarterly Report on Form 10-Q for the period ending September30, 2016.

Item 1.01 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

The disclosure contained in Item 1.01 of this Current Report on Form 8-K is incorporated herein by reference.

Item 1.01 Financial Statements and Exhibits.

(d) Exhibits.


WASHINGTON REAL ESTATE INVESTMENT TRUST Exhibit
EX-10.1 2 d551944dex101.htm EX-10.1 EX-10.1 Exhibit 10.1      EXECUTION COPY       AMENDED AND RESTATED CREDIT AGREEMENT Dated as of March 29,…
To view the full exhibit click here

About WASHINGTON REAL ESTATE INVESTMENT TRUST (NYSE:WRE)

Washington Real Estate Investment Trust is a self-administered, self-managed equity real estate investment trust. The Company’s business consists of the ownership and operation of income-producing real property in the greater Washington metro region. The Company’s three segments include office, retail and multifamily. It owns a portfolio of office buildings, multifamily buildings and retail centers. The Company owns a portfolio of approximately 50 properties, totaling approximately 7.2 million square feet of commercial space and over 3,260 residential units, and land held for development. Its approximately 50 properties consist of 20 office properties, 10 multifamily properties and 20 retail centers. The Company’s tenants include World Bank, Advisory Board Company, Booz Allen Hamilton, Inc., Squire Patton Boggs (USA) LLP, Engility Corporation, Hughes Hubbard & Reed LLP, Epstein, Becker & Green, P.C., Morgan Stanley, Smith Barney, General Services Administration and SunTrust Bank.

An ad to help with our costs