Item 1.01. |
Entry into Material Definitive Agreement. |
Amendment and Restatement of Credit Agreement
On October 5, 2022, Federal Realty OP LP (the “Partnership”) entered into a Second Amended and Restated Credit Agreement (the “New Credit Agreement”), by and among the Partnership, as Borrower, the financial institutions party thereto and their permitted assignees, as Lenders, Wells Fargo Bank, National Association, as Administrative Agent (the “Credit Agreement Administrative Agent”), and the other parties thereto.
The New Credit Agreement replaces that certain Amended and Restated Credit Agreement, dated as of July 25, 2019 (the “Old Credit Agreement”), by and among the Partnership, as Borrower, and the financial institutions party thereto. The Old Credit Agreement consisted of a $1.0 billion unsecured revolving credit facility (the “Old Facility”) with a maturity date of January 19, 2024. As of June 30, 2022, the Old Facility had no balance outstanding.
The New Credit Agreement consists of a $1.25 billion unsecured revolving credit facility (the “New Facility”) with a maturity date of April 5, 2027, subject to
two six-month extensions
at the option of the Partnership. The New Credit Agreement effected the transition of the interest rate provisions under Old Credit Agreement from LIBOR to the secured overnight financing rate, determined as provided therein (“SOFR”). Generally, the New Facility bears interest, at the Partnership’s option, at a rate based on (i) SOFR, plus 0.10%, or (ii) a Base Rate (as defined therein), in each case plus an applicable margin that depends on the Partnership’s credit rating. The applicable margins for SOFR loans under the New Credit Agreement range from 70 basis points to 140 basis points, and the applicable margins for Base Rate loans under the New Credit Agreement range from 0 basis points to 40 basis points. Initially, the applicable margin for SOFR loans will be 77.5 basis points. Under an accordion feature, the Partnership has the option to expand the borrowing capacity under the New Facility to up to $1.75 billion.
The New Credit Agreement provides that it may be amended by the Partnership and the Lenders to establish key performance indicators (“KPIs”) with respect to certain environmental, social and governance (“ESG”) targets of the Partnership and its subsidiaries, or to establish external ESG ratings targets, all to be developed by the Partnership in consultation with PNC Capital Markets LLC acting as Sustainability Structuring Agent. Following the effectiveness of any such amendment, based on the Partnership’s performance against such KPIs or its obtainment of such ESG ratings, the applicable margin and/or letter of credit fee may be reduced by up to 4.0 basis points, and/or the applicable facility fee may be reduced by up to 1.0 basis point.
The New Credit Agreement contains a number of restrictions on the Partnership’s business that are similar to the restrictions contained in the Old Credit Agreement, including, but not limited to, restrictions on the Partnership’s ability to incur indebtedness, make investments, incur liens, engage in certain affiliate transactions, and engage in major transactions such as mergers. In addition, the Partnership is subject to various financial maintenance covenants, including, but not limited to, a minimum fixed charge coverage ratio, a maximum secured indebtedness ratio, and a minimum unencumbered leverage ratio. The New Credit Agreement also contains affirmative covenants and events of default, including, but not limited to, a cross default to the Partnership’s other indebtedness and the occurrence of a change of control. The Partnership’s failure to comply with these covenants, or the occurrence of an event of default, could result in acceleration of the Partnership’s debt and other financial obligations under the New Credit Agreement.
The foregoing does not constitute a complete summary of the terms and conditions of the New Credit Agreement, which is attached hereto as Exhibit 10.1, or of the Old Credit Agreement, which was included as Exhibit 10.27 to the Partnership’s Annual Report on
Form 10-K filed
with the Securities and Exchange Commission on February 10, 2022. The descriptions contained herein of the terms and conditions of the New Credit Agreement and Old Credit Agreement are qualified in their entirety by reference to the New Credit Agreement and Old Credit Agreement, respectively.
Amendment of Term Loan Agreement
On October 5, 2022, the Partnership entered into the third amendment (the “Amendment”) to its Term Loan Agreement, dated May 6, 2020, among the Partnership, as Borrower, the financial institutions party thereto and their permitted assignees, as Lenders, PNC Bank, National Association, as Administrative Agent, and the other parties thereto (as amended, the “Term Loan Agreement”). In connection with the Amendment, the Partnership borrowed an additional $300 million under the Term Loan Agreement. As a result, as of October 5, 2022 the principal amount outstanding under the Term Loan Agreement was $600 million. As amended by the Amendment, the Term Loan Agreement does not have a further accordion feature.