First Potomac lowers pricing on loans, lifts revolver to $300 million

By Susanna Moon

Chicago, Oct. 22 - First Potomac Realty Investment LP, the operating partnership of First Potomac Realty Trust, lifted the size of its senior unsecured revolving credit facility to $300 million from $255 million and extended the maturity to Oct. 16, 2017 from Jan. 15, 2014.

Interest on the loans will initially be Libor plus 150 basis points. The spread over Libor ranges from 150 bps to 205 bps, based on the ratio of consolidated total debt to consolidated gross asset value.

If the company obtains a credit rating of at least BBB-/Baa3 from Standard & Poor's or Moody's Investors Service, the spread over Libor will range from 97.5 bps to 175 bps.

The rate was reduced from Libor plus 200 bps to 300 bps under the previous terms.

The company also added an accordion that allows for additional commitments of up to $300 million.

The company amended its credit agreement on Oct. 16 with KeyBank NA as a lender and administrative agent, according to an 8-K filing with the Securities and Exchange Commission.

KeyBanc Capital Markets, Wells Fargo Securities, LLC and PNC Capital Markets, LLC are the co-lead arrangers and bookrunners. Wells Fargo NA and PNC Bank, NA are the co-syndication agents. Bank of Montreal and U.S. Bank NA are the co-documentation agents.

The amount available for the company to borrow at any time under the amended agreement is the lesser of $300 million and the maximum principal amount of debt that would not cause the company to violate the unencumbered pool leverage ratio covenant.

As of Oct. 16, the company had borrowed $83 million under the amended agreement.

The agreement requires that the company to maintain total debt at no more than 60% of gross asset value and a minimum fixed charge coverage ratio of more than 1.5 times.

The company also must maintain a minimum tangible net worth of (i) $601,201,775, plus (ii) 80% of the net proceeds of any future equity issuances of the company plus (iii) 80% of the value of partnership units issued in connection with any future asset or stock acquisitions.

Amended term loan agreement

The company also amended its term loan agreement to restructure the $300 million unsecured term loan into three $100 million tranches, consisting of a $100 million tranche A term loan, a $100 million tranche B term loan and a $100 million tranche C term loan due on Oct. 16, 2018, Oct. 16, 2019 and Oct. 16, 2020, respectively.

The terms add more than two years to the maturity dates, reduce the spread on the interest rates, eliminate prepayment lockouts and eliminate prepayment penalties.

The interest rate is

• Libor plus 145 bps to 200 bps for tranche A, down from Libor plus 215 bps to 265 bps;

• Libor plus 160 bps to 215 bps for tranche B, down from Libor plus 225 bps to 275 bps; and

• Libor plus 190 bps to 255 bps for tranche C, down from Libor plus 230 bps to 280 bps.

If the company obtains investment-grade ratings, the interest rate will be

• Libor plus 110 bps to 200 bps for tranche A;

• Libor plus 125 bps to 215 bps for tranche B; and

• Libor plus 145 bps to 240 bps for tranche C.

First Potomac is a Bethesda, Md.-based real estate investment trust.

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