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 into this Item 1.01.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
On May 26, 2022, Rexford Industrial Realty, Inc. (the “Company”), as parent, and Rexford Industrial Realty, L.P. (the “Borrower”), as borrower, entered into a Fourth Amended and Restated Credit Agreement (the “Credit Agreement”) with Bank of America, N.A., as administrative agent and a letter of credit issuer, and the other lenders named therein, which amends and restates in its entirety that certain Third Amended and Restated Credit Agreement, dated as of February 13, 2020, by and among the Company, the Borrower and Bank of America, N.A., as administrative agent, swingline lender and letter of credit issuer.
The Credit Agreement provides for (i) a senior unsecured term loan facility (“Term Loan Facility”) that permits aggregate borrowings of up to $300 million, all of which was borrowed at closing on May 26, 2022 and (ii) a senior unsecured revolving credit facility (“Revolving Credit Facility”) in the aggregate principal amount of $1 billion. The proceeds of the Term Loan Facility will be used to pay down the outstanding balance under the Borrower’s existing $150 million unsecured term loan facility, terminate the associated swap, partially pay down the outstanding balance under the Borrower’s revolving credit facility and for general corporate purposes. The proceeds of the Revolving Credit Facility will be used for general corporate purposes. The maturity date of the Term Loan Facility is May 26, 2027, and the maturity date of the Revolving Credit Facility is May 26, 2026 (with two extensions options of six months each). The Credit Agreement permits the Borrower to add one or more incremental term loans in an aggregate amount not to exceed $1.2 billion. Any increase in borrowings is subject to the satisfaction of specified conditions and the identification of lenders willing to make available such additional amounts.
Amounts outstanding under the Credit Agreement will bear interest at a rate equal to, at the Borrower’s option, either (i) Term SOFR plus the applicable margin; (ii) Daily Simple SOFR plus the applicable margin or (iii) the applicable base rate which is the highest of (a) the federal funds rate plus 0.50%, (b) the administrative agent’s prime rate or (c) Term SOFR plus 1.00%, plus the applicable margin. Term SOFR and Daily Simple SOFR will be increased by a 0.10% SOFR adjustment. The applicable margin with respect to the Term Loan Facility and the applicable margin and credit facility fee (the “Credit Facility Fee”) with respect to the Revolving Credit Facility will be determined based on the Company’s and the Borrower’s Debt Rating (as defined in the Credit Agreement) as follows:
| | | | | | | | | | | | |
Pricing Level | | Debt Rating | | Revolving Credit
Facility Fee Rate
Applicable Margin | | Revolving Credit
Facility Term SOFR
Rate Loan, Daily
SOFR Rate Loan,
and Letter of Credit
Applicable Margin | | Revolving Credit
Facility Base Rate
Loan Applicable
Margin | | Term Loan Facility
Term SOFR Rate
Loan and Daily
SOFR Rate Loan
Applicable Margin | | Term Loan Facility
Base Rate Loan
Applicable Margin |
1 | | ≥ A-/A3 | | 0.125% | | 0.725% | | 0.00% | | 0.80% | | 0.00% |
2 | | BBB+/Baa1 | | 0.150% | | 0.775% | | 0.00% | | 0.85% | | 0.00% |
3 | | BBB/Baa2 | | 0.200% | | 0.850% | | 0.00% | | 0.95% | | 0.00% |
4 | | BBB-/Baa3 | | 0.250% | | 1.050% | | 0.05% | | 1.20% | | 0.20% |
5 | | <BBB-/Baa3 | | 0.300% | | 1.400% | | 0.40% | | 1.60% | | 0.60% |
The interest rate under the Credit Agreement is also subject to a leverage-based adjustment if the Company’s ratio of total indebtedness to total asset value (“Leverage Ratio”) is less than 35%. In such case, (1) if one of the Company’s or the Borrower’s Debt Rating is at least BBB- /Baa3 and the other is not lower than BBB-/Baa3, then Pricing Level 3 in the above chart will apply, (2) if one of the Company’s or the Borrower’s Debt Rating is at least BBB/Baa2 and the other is not lower than BBB-/Baa3, then Pricing Level 2 in the above chart will apply, and (3) if one of the Company’s or the Borrower’s Debt Rating is at least BBB+/Baa1 and the other is not lower than BBB/Baa2, then Pricing Level 1 in the above chart will apply.
In addition, the Credit Agreement also features a sustainability-linked pricing component whereby the applicable margin and the Credit Facility Fee can decrease by 0.01% or increase by up to 0.04% if the Borrower meets, or does not meet, certain sustainability performance targets, as applicable.
The Borrower may voluntarily prepay loans under the Credit Agreement in whole or in part at any time, subject to certain notice requirements.
The Credit Agreement is not secured by the Company’s properties or by equity interests in the subsidiaries that hold such properties.
The Credit Agreement includes a series of financial and other covenants that the Company and the Borrower must comply with, including:
| | • | | Maintaining a ratio of total indebtedness to total asset value of not more than 60%; |
| | • | | Maintaining a ratio of total secured debt to total asset value of not more than 45%; |
| | • | | Maintaining a ratio of adjusted EBITDA to fixed charges of at least 1.50 to 1.0; |
| | • | | Maintaining a ratio of total unsecured debt to total unencumbered asset value of not more than 60%; and |
| | • | | Maintaining a ratio of unencumbered NOI to unsecured interest expense of at least 1.75 to 1.0. |
