ARES INDUSTRIAL REAL ESTATE INCOME TRUST (ARIR)
Filed: 6 Apr 22, 1:13pm
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of The
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): March 31, 2022
Ares Industrial Real Estate Income Trust Inc.
(Exact name of registrant as specified in its charter)
| | |
Maryland | 000-56032 | 47-1592886 |
(State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
518 Seventeenth Street, 17th Floor
Denver, CO 80202
(Address of principal executive offices)
(303) 228-2200
(Registrant’s telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act: None
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 1.01. Entry into a Material Definitive Agreement.
The information discussed under Item 2.03 of this Current Report on Form 8-K is incorporated by reference into this Item 1.01.
Item 2.03. Creation of a Direction Financial Obligation or an Obligation under an Off Balance Sheet Arrangement of a Registrant.
Third Amended and Restated Credit Facility Agreement
On March 31, 2022 (the “Effective Date”), AIREIT Operating Partnership LP (formerly known as BCI IV Operating Partnership LP, the “Borrower”), a wholly-owned subsidiary of Ares Industrial Real Estate Income Trust Inc. (formerly Black Creek Industrial REIT IV Inc., the “Company,” and collectively with the Borrower, “we,” “us,” or “our”), amended and restated its existing senior unsecured revolving and term credit facility agreement (the “Credit Facility Agreement”) by entering into a $1.0 billion revolving credit facility (the “Revolving Credit Facility”) and a $550.0 million term loan (the “Term Loan”), for an aggregate amount of $1.55 billion (collectively, the “Credit Facility”) with a syndicate of lenders led by Wells Fargo Bank, National Association and Bank of America, N.A., together with Wells Fargo Securities, LLC and BofA Securities, Inc. both as Joint Bookrunners and Joint Lead Arrangers, with Capital One, National Association, U.S. Bank National Association, and Truist Bank, as Joint Lead Arrangers for the Revolving Credit Facility, and with Regions Capital Markets and PNC Bank, National Association, as Joint Lead Arrangers for the Term Loan. The lenders are Wells Fargo Bank, National Association and Bank of America, N.A., Capital One, N.A., Truist Bank, U.S. Bank National Association, PNC Bank, National Association, Regions Bank, JPMorgan Chase Bank, N.A., Goldman Sachs, The Huntington National Bank, CitiBank, N.A., Pinnacle Bank, Zions Bancorporation, N.A. dba Vectra Bank Colorado, Associated Bank, National Association and Eastern Bank (collectively, the “Credit Facility Lenders”). The Credit Facility provides the Borrower with the ability from time to time to increase the size of the Credit Facility up to a total of $2.3 billion, subject to receipt of lender commitments and other conditions. The Credit Facility Agreement amends and restates in its entirety that certain Second Amended and Restated Credit Agreement dated as of November 19, 2019, as amended, among the Company, the Borrower, and certain of the Lenders (the “Prior Credit Facility Agreement”).
The Revolving Credit Facility contains a sublimit for letters of credit of the lesser of (i) 20.0% of the aggregate Credit Facility commitments, and (ii) $25.0 million. The primary interest rate for the Revolving Credit Facility is based on an Adjusted Term Secured Overnight Financing Rate (“SOFR”), plus a margin ranging from 1.25% to 2.00%, depending on the Company’s consolidated leverage ratio. The maturity date of the Revolving Credit Facility is March 2025 and contains two one year extension options that the Borrower may exercise upon (i) payment of an extension fee equal to 0.125% of the aggregate commitments under the Revolving Credit Facility at the time of the extension, and (ii) compliance with the other conditions set forth in the credit facility agreement. The primary interest rate for the Term Loan is based on Adjusted Term SOFR, plus a margin ranging from 1.20% to 1.90%, depending on the Company’s consolidated leverage ratio. The maturity date of the Term Loan is March 2027.
The Borrower must pay to the administrative agent a quarterly unused Revolving Credit Facility fee that equals the amount of the Revolving Credit Facility unused by the Borrower on a given day multiplied by either (i) 0.15% on an annualized basis if 50% or more of the Revolving Credit Facility is being used or (ii) 0.20% on an annualized basis if less than 50% of the Revolving Credit Facility is being used. The undisbursed portions of the Term Loan (equal to $100.0 million) may be drawn in up to two advances, each in a minimum amount of $50.0 million during the period commencing on April 1, 2022 and prior to the initial Term Loan commitment expiration date, which is the earliest of (i) the date upon which the initial $550.0 million Term Loan commitment is fully advanced; (ii) the six-month anniversary of the Effective Date; or (iii) the termination of the initial Term Loan commitment. For the period commencing on June 30, 2022 and ending on the expiration of the initial Term Loan commitment expiration date, the Borrower must pay to the administrative agent on a quarterly basis a ticking fee, that equals the average daily undrawn amount of the Term Loan multiplied by a rate of 0.15% on an annualized basis.
Borrowings under the Credit Facility are guaranteed by the Company and certain of its subsidiaries. The Credit Facility requires the maintenance of certain financial covenants, including: (i) consolidated leverage ratio; (ii) consolidated fixed charge coverage ratio; (iii) consolidated tangible net worth; (iv) secured indebtedness to total asset value; (v) secured recourse indebtedness to total asset value; (vi) minimum total asset value. The Credit Facility provides the flexibility to move assets in and out of the unencumbered property pool during the term of the Credit Facility, subject to compliance with certain covenants.
In addition, the Credit Facility contains customary affirmative and negative covenants, which, among other things, require the Borrower to deliver to the Credit Facility Lenders specified quarterly and annual financial information, and limit the Borrower and/or the Company, subject to various exceptions and thresholds, from: (i) creating liens on the unencumbered asset pool; (ii) merging with other companies or causing a change of control; (iii) selling all or substantially all of its assets or properties; (iv) entering into transactions with affiliates, except on an arms-length basis; (v) making certain types of investments; (vi) changing the nature of the Company’s business; and (vii) if the Borrower is in default under the Credit Facility, paying certain distributions or certain other payments to affiliates.
2
The Credit Facility permits voluntary prepayment of principal and accrued interest without premium or penalty subject to payment of applicable SOFR breakage fees and contains various customary events of default, which are described therein. As is customary in such financings, if an event of default occurs under the Credit Facility, the majority Credit Facility Lenders may accelerate the repayment of amounts outstanding under the Credit Facility and exercise other remedies subject, in certain instances, to the expiration of an applicable cure period.
Borrowings under the Credit Facility are available for general business purposes including, but not limited to, refinancing of existing indebtedness and financing the acquisition of permitted investments, including commercial properties.
The preceding summary does not purport to be a complete summary of the Credit Facility and is qualified in its entirety by reference to the Credit Facility Agreement, a copy of which is filed herewith as Exhibit 10.1 and is incorporated by reference herein.
Pro Forma Information
Assuming the Credit Facility was in-place as of December 31, 2021, on a pro forma basis, this would have resulted in a decrease of the Company’s overall weighted-average interest rate from 2.14% to 2.13% and an increase of the Company’s weighted-average debt maturity from 4.2 years to 4.8 years, before consideration of any available extension options.
Contractual Maturities
Upon the closing of the Credit Facility, as of March 31, 2022, the principal payments due on our debt during each of the next five years and thereafter, excluding extension options, were as follows:
(2) | |||||||||||||
(in thousands) |
| Line of Credit (1) |
| Term Loans |
| Mortgage Notes (2) |
| Total |
| ||||
2022 |
| $ | — |
| $ | — |
| $ | — |
| $ | — |
|
2023 |
| — |
| — |
| — |
| — |
| ||||
2024 |
| — |
| — |
| 38,000 |
| 38,000 |
| ||||
2025 |
| 56,000 |
| — |
| 617,250 |
| 673,250 |
| ||||
2026 |
| — |
| 600,000 |
| — |
| 600,000 |
| ||||
Thereafter |
| — |
| 450,000 |
| 590,890 |
| 1,040,890 |
| ||||
Total principal payments |
| $ | 56,000 |
| $ | 1,050,000 |
| $ | 1,246,140 |
| $ | 2,352,140 |
|
| (1) | The term of the line of credit may be extended pursuant to two one-year extension options as described above. |
| (2) | The term of a mortgage note in the amount of $209.3 million may be extended pursuant to a one-year extension option, subject to certain conditions, and the term of another mortgage note in the amount of $408.0 million may be extended pursuant to two one-year extension options, subject to certain conditions. |
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
0.1 | ||
Exhibit |
| Description |
10.1 | | |
104 | | Cover Page Interactive Data File (embedded within the Inline XBRL document). |
3
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| | | |
| BLACK CREEK INDUSTRIAL REIT IV INC. | ||
| | | |
April 6, 2022 | | By: | /s/ SCOTT A. SEAGER |
| | | Name: Scott A. Seager |
| | | Title: Senior Vice President, Chief Financial Officer and Treasurer |
4