| Item 1.01 | Entry into a Material Definitive Agreement |
| Item 2.03 | Creation of Direct Financial Obligation or an Obligation under an Off-Balance Sheet Agreement of a Registrant |
On August 17, 2021, Terreno Realty LLC (the “Company”), a wholly-owned subsidiary of Terreno Realty Corporation (the “Parent Guarantor”), and the Parent Guarantor entered into a Note Purchase Agreement (the “Note Purchase Agreement”) with the various purchasers named therein (the “Purchasers”) in connection with a private placement of senior guaranteed notes. Under the Note Purchase Agreement, the Company will sell to the Purchasers $125,000,000 aggregate principal amount of 2.38% Senior Guaranteed Notes, Series C, due August 17, 2030 (the “Notes”). The Notes bear interest at a rate of 2.38% per annum, payable semiannually, on the 17th day of February and August in each year until maturity, commencing on February 17, 2022. The entire principal amount of the Notes is due and payable on August 17, 2030. The sale and purchase of the Notes will occur at a closing on October 28, 2021, subject to the satisfaction of customary closing conditions.
The Company may prepay at any time all, or from time to time any part of, the Notes, in an amount not less than 10% of the aggregate principal amount of the Notes then outstanding in the case of a partial prepayment, at 100% of the principal amount so prepaid plus a make-whole premium, if any, as set forth in the Note Purchase Agreement. The obligations of the Company under the Notes are unconditionally guaranteed by the Parent Guarantor and by each of the Company’s subsidiaries that guarantees or otherwise becomes liable at any time, whether as a borrower or an additional or co-borrower or otherwise, for or in respect of any indebtedness under the Company’s Primary Credit Facility (as defined in the Note Purchase Agreement).
In the event of a Change of Control (as defined in the Note Purchase Agreement), each holder of the Notes may require the Company to prepay the entire unpaid principal amount of the Notes held by such holder at a price equal to 100% of the principal amount of such Notes together with accrued and unpaid interest thereon, but without any make-whole, premium, penalty or Make-Whole Amount (as defined in the Note Purchase Agreement).
The Note Purchase Agreement contains restrictive covenants that, among other things, restrict the ability of the Company to: (i) enter into transactions with affiliates; (ii) merge, consolidate, transfer or lease all or substantially all of its assets; (iii) create liens; and (iv) make certain investments, and the Company is required to comply with certain additional requirements with respect to qualifying unencumbered properties as defined and set forth therein. Subject to certain conditions, the covenant with respect to qualifying unencumbered properties will be removed, amended or otherwise modified to be more or less restrictive if the analogous covenant in the Primary Credit Facility is so removed, amended or otherwise modified.
The Note Purchase Agreement also includes the following financial covenants, which require that the Company and the Parent Guarantor will not permit: (i) the unencumbered property pool leverage ratio to be greater than 60% at any time, provided that such ratio will surge to 65% for a period of two complete consecutive fiscal quarters following a material acquisition, provided further that no more than two such surge periods will be allowed during the term of the Notes; (ii) consolidated total indebtedness, less unrestricted cash and cash equivalents, to be more than 60% of consolidated gross asset value at any time, provided that such ratio will surge to 65% for a period of two complete consecutive fiscal quarters following a material acquisition, provided further that no more than two such surge periods will be allowed during the term of the Notes; (iii) adjusted EBITDA to be less than 1.50x consolidated fixed charges at any time; (iv) secured indebtedness, in the aggregate at any time, to be more than 40% of consolidated gross asset value; (v) the unsecured debt service coverage to be less than 1.75 to 1.00 at any time; (vi) recourse indebtedness that constitutes secured indebtedness, in the aggregate at any time, to be more than 10% of
