iStar revises term loan sizes, updates original issue discounts

By Sara Rosenberg

New York, March 16 - iStar Financial Inc. downsized its first-out four-year term loan A-1 (B1/BB) to $410 million from $500 million and upsized its second-out five-year term loan A-2 (B2/BB-) to $470 million from $400 million, according to a market source.

Pricing on the term loan A-1 was left unchanged at Libor plus 400 basis points with a 1.25% Libor floor, but the original issue discount widened to 98 from talk of 98½ to 99, the source said.

The term loan A-2 also saw pricing unchanged at Libor plus 575 bps with a 1.25% Libor floor, and its original issue discount firmed at 981/2, the wide end of the 98½ to 99 guidance, the source continued.

Call protection on the term loan A-1 has been revised to non-callable for one year, then at 102 in year two and par thereafter, from 101 in year one and 100½ in year two.

As before, the term loan A-2 is non-callable for three years, then at 104 in year four and par thereafter.

Amortization is 10% every six months beginning on Dec. 31, 2012 on the term loan A-1, while amortization on the term loan A-2 starts after the paydown of the term loan A-1.

Commitments toward the $880 million of new senior secured term loans, down from $900 million, were being asked for by 5 p.m. ET on Friday.

Allocations are expected in the week of March 19, with Monday being the targeted day, the source added.

Barclays Capital Inc. and Bank of America Merrill Lynch are the joint lead arrangers on the deal and bookrunners with J.P. Morgan Securities LLC.

Outstanding borrowings under the new debt will be collateralized by a $1.13 billion pool of diversified collateral of loans, net lease assets and other real estate assets, including assets net leased to Hilton Hotels and Preferred Freezer.

Proceeds will be used to refinance the company's 2012 unsecured debt maturities.

At Dec. 31, the company's net leverage was 2.7 times, and gross leverage was 2.1 times.

iStar Financial is a New York-based finance and investment company focused on the commercial real estate industry.

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