Item 1.01 Entry into a Material Definitive Agreement.
On June 22, 2022, Invitation Homes Operating Partnership LP (the “Borrower”), a wholly owned subsidiary of Invitation Homes Inc. (the “Company”), entered into the Term Loan Agreement (the “Term Loan Agreement”) with the lenders party thereto (the “Lenders”) and Capital One, National Association, as administrative agent. The Term Loan Agreement provides for senior unsecured term loans, with current commitments totaling $725.0 million (together, collectively, the “Term Loans”), consisting of:
| | • | | a $150.0 million initial term loan (the “Initial Term Loan”), which will mature on June 22, 2029; and |
| | • | | up to three delayed draw term loans (the “Delayed Draw Term Loans”) totaling $575.0 million, which will mature on June 22, 2029, which may be drawn during the six month period following the date of effectiveness of the Term Loan Agreement. |
The Term Loan Agreement also includes an accordion feature providing the option to increase the size of the Term Loans or enter into additional incremental term loans, such that the aggregate amount of the Term Loans, together with such additional incremental term loans, does not exceed at any time $950.0 million, subject to certain limitations.
Proceeds from the Initial Term Loan and excess cash on hand were used as part of a series of transactions to fully repay the $232.7 million principal balance of the IH 2018-2 securitization due to reach final maturity on June 9, 2025.
Interest Rate and Fees
Borrowings under the Term Loan Agreement bear interest, at the Borrower’s option, at a rate equal to a margin over either (a) an Adjusted Term SOFR rate determined by reference to the Term SOFR rate published by the Term SOFR Administrator for the interest period relevant to such borrowing or (b) a base rate determined by reference to the highest of (1) the administrative agent’s prime lending rate, (2) the federal funds effective rate plus 0.50%, and (3) the Term SOFR reference rate that would be payable on such day for an Adjusted Term SOFR rate loan with a one-month interest period plus 1.00%. The margin for the Initial Term Loan and the Delayed Draw Term Loans ranges from 0.15% to 1.20%, in the case of base rate loans, and 1.15% to 2.20%, in the case of Term SOFR loans. The margin as of the date of effectiveness of the Term Loan Agreement is 0.25%, in the case of base rate loans, and 1.25%, in the case of Term SOFR rate loans. The Term Loan Agreement also includes a sustainability component whereby the Term Loans’ pricing can improve upon the Company’s achievement of certain sustainability ratings, determined via an independent third-party evaluation.
The Borrower is also required to pay an unused fee to the lenders equal to the daily unused balance of the Delayed Draw Term Loan commitments multiplied by 0.20% per annum.
Prepayments
The Borrower is permitted to voluntarily repay amounts outstanding under the Term Loans (a) on or prior to the first anniversary of the closing subject to a 2.0% prepayment fee, (b) on or prior to the second anniversary of the closing subject to a 1.0% prepayment fee and (c) at any time thereafter without premium or penalty
Amortization
The Term Loans have no required amortization payments prior to the final maturity date.
Guarantees
The obligations under the Term Loans are guaranteed on a joint and several basis by the Company and each other subsidiary of the Company that owns, directly or indirectly, equity interests in the Borrower. These guarantees will be automatically released upon the occurrence of certain events. In addition, certain domestic wholly owned subsidiaries of the Borrower that own, directly or indirectly, unencumbered assets may be required to provide a guarantee of the Term Loans under certain circumstances, including if such subsidiary is a borrower or guarantor of other recourse indebtedness.
