First Potomac gets $40 million bridge loan, amends loan covenants

By Angela McDaniels

Tacoma, Wash., Feb. 13 - First Potomac Realty Trust entered into a bridge loan, and its operating partnership amended the financial covenants of its revolving credit facility and term loan, according to an 8-K filing with the Securities and Exchange Commission.

On Feb. 7, First Potomac entered into an up to $40 million senior secured multi-tranche term loan facility with KeyBank, NA.

The bridge loan can be drawn in four separate tranches before March 31. It matures in November 2013, and the company has a three-month extension option.

The interest rate is Libor plus 215 basis points.

The company can repay all or a portion of the bridge loan at any time.

First Potomac borrowed $30 million under the bridge loan to repay $28.7 million of mortgage loans.

Amendments

The company's operating partnership, First Potomac Realty Investment LP, amended its revolving credit facility and unsecured term loan on Feb. 8.

First Potomac said the amendments give it increased flexibility on a short-term basis under some of the financial covenants by extending the Dec. 31, 2012 ratios for those covenants.

The amendments also address the impact that the potential sale of the company's industrial portfolio would have on the covenants relating to tangible net worth and dispositions as a percentage of gross asset value.

Specifically, the following financial covenants were amended as follows:

• The maximum consolidated total leverage ratio was increased to 65% for the first three quarters of 2013 (from 62.5% for the first and second quarters and 60% for the third quarter) and then will decrease to 60%;

• The minimum consolidated debt yield was reduced to 10% for the first three quarters of 2013 (from 10.5% for the first and second quarters and 11% for the third quarter) and then will increase to 11%;

• The maximum unencumbered pool leverage ratio was increased to 65% for the first three quarters of 2013 (from 62.5% for the first and second quarters and 60% for the third quarter) and then will decrease to 60%; and

• The minimum tangible net worth covenant was revised to provide that the minimum tangible net worth will be reduced by an amount equal to 65% of the net sales proceeds received from the sale of any properties included in the industrial portfolio, subject to the completion of these sales.

The lenders consented to the exclusion of the potential sale of the industrial portfolio from the calculation of the net sales price that is used in determining the 20% limitation on properties sold in any four-quarter period; provided that, for any period of time during which the sale of the industrial portfolio is excluded from that calculation, the net sales price of the sale of other properties will not exceed 10% (rather than 20%) of the most recently reported consolidated gross asset value.

Finally, First Potomac Realty Investment amended its secured term loan agreement to make substantially the same amendments as the amendments described above.

KeyBank is the administrative agent on each of the amended credit facilities.

First Potomac is a Bethesda, Md.-based real estate investment trust that focuses on industrial properties and business parks in the Washington, D.C., metropolitan area.

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