Item 1.01. Entry into a Material Definitive Agreement.
On January 14, 2019, Spirit Realty L.P. (the “Operating Partnership”) entered into an unsecured revolving credit and term loan agreement with a syndicate of lenders, JPMorgan Chase Bank, N.A., as Administrative Agent, and certain other financial institutions party thereto (the “Revolving Credit and Term Loan Agreement”). The Revolving Credit and Term Loan Agreement, which refinances and replaces the Operating Partnership’s existing revolving credit agreement and term loan agreement in their entirety, provides for $800 million of aggregate revolving commitments with a maturity date of March 31, 2023 and $420 million of term loans with a maturity date of March 31, 2024. The Revolving Credit and Term Loan Agreement provides that the revolving loans will bear interest, at the Operating Partnership’s option, at the rate of either (x) the London interbank offered rate (“LIBOR”) plus (i) an applicable margin ranging from 0.775% to 1.45% depending on the Operating Partnership’s credit rating or, at the Operating Partnership’s one-time irrevocable election, (ii) an applicable margin ranging from 1.30% to 1.80% depending on the Operating Partnership’s leverage ratio, or (y) a base rate plus (i) an applicable margin ranging from 0.00% to 0.45% depending on the Operating Partnership’s credit rating or, at the Operating Partnership’s one-time irrevocable election, (ii) an applicable margin ranging from 0.30% to 0.80% depending on the Operating Partnership’s leverage ratio. The Revolving Credit and Term Loan Agreement provides that the term loans will bear interest, at the Operating Partnership’s option, at the rate of either (x) LIBOR plus (i) an applicable margin ranging from 0.85% to 1.65% depending on the Operating Partnership’s credit rating or, at the Operating Partnership’s one-time irrevocable election, (ii) an applicable margin ranging from 1.25% to 1.70% depending on the Operating Partnership’s leverage ratio, or (y) a base rate plus (i) an applicable margin ranging from 0.00% to 0.65% depending on the Operating Partnership’s credit rating or, at the Operating Partnership’s one-time irrevocable election, (ii) an applicable margin ranging from 0.25% to 0.70% depending on the Operating Partnership’s leverage ratio. In addition, so long as the interest rate for the revolving loans is determined by the Operating Partnership’s credit rating, a facility fee is charged on the aggregate revolving commitments at a rate ranging from 0.125% to 0.30% depending on the Operating Partnership’s credit rating. From and after an election by the Operating Partnership to have the interest rate for the revolving loans determined by reference to the Operating Partnership’s leverage ratio, an unused fee is charged on the unused portion of the revolving commitments at a rate ranging from 0.15% to 0.25% depending on the percentage of revolving commitments used by the Operating Partnership.
The Operating Partnership is required to comply with the following financial comments under the Revolving Credit and Term Loan Agreement:
| | • | | Maximum total debt to total asset value ratio not to exceed 0.60:1.00; |
| | • | | Maximum Adjusted EBITDA to fixed charges ratio not less than 1.50:1.00; |
| | • | | Maximum secured debt to total asset value ratio not to exceed 0.50:1.00; |
| | • | | Ratio of unencumbered NOI to unsecured interest expense not less than 1.75:1.00; and |
| | • | | Maximum unsecured debt to unencumbered asset value ratio not to exceed 0.60:1.00. |
The Revolving Credit and Term Loan Agreement contains customary affirmative and negative covenants that, among other things, limit the ability of Spirit Realty Capital, Inc. (the “Company”) to pay dividends, incur debt, incur liens and enter into certain transactions. A breach of such covenants or any other event of default would entitle the Administrative Agent to accelerate the Operating Partnership’s debt obligations.
In connection with the Revolving Credit and Term Loan Agreement, the Company entered into a guaranty (the “Revolving Credit and Term Loan Guaranty”) pursuant to which it has absolutely, irrevocably and unconditionally guaranteed to JPMorgan Chase Bank, N.A., as Administrative Agent, for the benefit of the lenders party to the Revolving Credit and Term Loan Agreement, the payment and performance of the obligations of the Operating Partnership under the Revolving Credit and Term Loan Agreement as and when due and payable.
In addition, on January 14, 2019, the Operating Partnership entered into an unsecured delayed draw term loan agreement with a syndicate of lenders, Bank of America, N.A., as Administrative Agent, and certain other financial institutions party thereto (the “Delayed Draw Term Loan Agreement”). The Delayed Draw Term Loan Agreement provides for $400 million of delayed draw term loans with a maturity date of March 31, 2022. The Delayed Draw Term Loan Agreement provides that the delayed draw term loans will bear interest, at the Operating Partnership’s option, at the rate of either (x) LIBOR plus (i) an applicable margin ranging from 0.85% to 1.65% depending on the Operating Partnership’s credit rating or, at the Operating Partnership’s one-time irrevocable election, (ii) an applicable margin ranging from 1.25% to 1.70% depending on the Operating Partnership’s leverage ratio, or (y) a base rate plus (i) an applicable margin ranging from 0.00% to 0.65% depending on the Operating Partnership’s credit rating or, at the Operating Partnership’s one-time irrevocable election, (ii) an applicable margin ranging from 0.25% to 0.70% depending on the Operating Partnership’s leverage ratio. In addition, a ticking fee accrues on the unused portion of the commitments at a rate of 0.20% until the earlier of July 12, 2019 and the termination of the commitments. There are currently no borrowings outstanding under the Delayed Draw Term Loan Agreement.
