| Item 1.01. | Entry into a Material Definitive Agreement |
The information set forth under Item 2.03, “Creation of a Direct Financial Obligation or an Obligation Under an Off-Balance Sheet Arrangement of a Registrant” is incorporated herein by reference.
| Item 2.03. | Creation of a Direct Financial Obligation or an Obligation Under an Off-Balance Sheet Arrangement of a Registrant |
On June 14, 2022, Piedmont Operating Partnership, LP (“Piedmont OP”), a wholly-owned subsidiary of Piedmont Office Realty Trust, Inc. (the “Registrant”), amended and restated its existing $500 Million Unsecured 2018 Line of Credit. As amended and restated, the size of the line of credit has been expanded to $600 million and priced as of closing at the Adjusted Daily Effective Secured Overnight Financing Rate (“SOFR”) Rate plus 85 basis points (the “$600 Million Unsecured 2022 Line of Credit”).
$600 Million Unsecured 2022 Line of Credit
On June 14, 2022, Piedmont OP amended and restated its existing $500 Million Unsecured 2018 Line of Credit. The $500 Million Unsecured 2018 Line of Credit had an initial maturity date of September 30, 2022. As amended and restated, the maturity date of the $600 Million Unsecured 2022 Line of Credit has been extended to June 30, 2026, and Piedmont OP may extend the term for up to one additional year (through two available six-month extensions) provided Piedmont OP is not then in default and all representations and warranties under the $600 million Unsecured 2022 Line of Credit are true and correct in all material respects and upon payment of applicable extension fees. Additionally, under certain terms of the agreement, Piedmont OP may increase the new facility by up to an additional $500 million, to an aggregate size of $1.1 billion, provided that no existing bank has any obligation to participate in such increase. Piedmont OP paid customary arrangement and upfront fees to the lenders in connection with the closing of the new facility.
The $600 Million Unsecured 2022 Line of Credit has the option to bear interest at varying levels (determined with reference to the greater of the credit rating for the Registrant or Piedmont OP) based on the Adjusted Term SOFR Rate, the Adjusted Daily Effective SOFR Rate, or the Base Rate, defined as the greater of the prime rate, the Federal Reserve Bank of New York rate plus 0.5%, or the Adjusted Term SOFR Rate for a one-month period plus 1.0%. The term SOFR loans are available with interest periods selected by Piedmont OP of one, three, or six months. The stated interest rate spread over Adjusted SOFR can vary from 0.725% to 1.40% based upon the greater of the then current credit rating of Registrant or Piedmont OP; provided that, upon achievement of a certain leverage ratio and dependent upon the Registrant or Piedmont OP’s then current credit rating, the applicable margin could be based upon that of the next higher credit rating. As of the closing of the $600 Million Unsecured 2022 Line of Credit, based upon the Registrant’s current BBB (S&P) credit rating, the current stated Adjusted SOFR spread on the loan is 0.85%.
Under the $600 Million Unsecured 2022 Line of Credit, Piedmont OP is subject to certain financial covenants that require, among other things, the maintenance of an unencumbered interest coverage ratio of at least 1.75, an unencumbered leverage ratio of at least 1.60, a fixed charge coverage ratio of at least 1.50, a net leverage ratio of no more than 0.60, and a secured net debt ratio of no more than 0.40.
The foregoing does not purport to be a complete description of the terms of the $600 Million Unsecured 2022 Line of Credit and is qualified in its entirety by reference to the $600 Million Unsecured 2022 Line of Credit agreement, which is attached as Exhibit 10.1 hereto.
