Franklin Street enters $217.5 million two-year revolving credit line

By Marisa Wong

Los Angeles, Jan. 12 – Franklin Street Properties Corp. entered into a credit agreement on Jan. 10 with Bank of America, NA as administrative agent, a letter-of-credit issuer and a lender for a new revolving line of credit of up to $217.5 million, according to an 8-K filing with the Securities and Exchange Commission.

The revolver matures on Jan. 12, 2024, but the company may request an extension of the maturity date.

The revolver includes an accordion feature that allows the company to request an increase in borrowing capacity to an aggregate amount not exceeding $750 million.

Borrowings bear interest at a margin over either (i) daily simple SOFR plus an adjustment of 11.448 basis points or (ii) one-, three- or six-month term SOFR plus a corresponding adjustment of 11.448 bps, 26.161 bps or 42.826 bps, respectively.

The margin over SOFR varies depending on the company’s leverage ratio and is 195 bps as of Jan. 10. The margin generally ranges from 155 bps to 235 bps.

If the company is assigned an investment-grade credit rating, the company has a one-time right to covert to a different pricing grid, in which case the margin will range from 72.5 bps to 140 bps.

The company must also pay an annual facility fee based on its leverage ratio. The facility fee was 35 bps at closing. The facility fee generally ranges from 30 bps to 40 bps or, if the company obtains investment-grad ratings, 12.5 bps to 30 bps.

The credit agreement contains financial covenants that require the company to maintain a minimum tangible net worth, a maximum leverage ratio, a maximum secured leverage ratio, a minimum fixed-charge coverage ratio, a maximum unencumbered leverage ratio and a minimum unsecured interest coverage ratio.

The company may use loan proceeds to finance the acquisition of real properties and for other permitted investments, to finance investments associated with sponsored REITs, to refinance or retire debt and for working capital and other general business purposes.

BofA Securities, Inc., BMO Capital Markets Corp. and JPMorgan Chase Bank, NA are the joint bookrunners and joint lead arrangers for the new revolver, with JPMorgan and Bank of Montreal as syndication agents. Citizens Bank, NA and Regions Bank are documentation agents.

Effective simultaneously with the closing of the new revolver, the company delivered a notice of early termination of its former $600 million revolving line of credit dated Oct. 29, 2014. There were no borrowings outstanding under the prior revolver, which would have matured on Jan. 12, 2022.

The 2014 credit agreement also evidenced a $400 million term loan, about $110 million of which remained outstanding as of Dec. 31. The term loan matures on Jan. 12, 2023.

Franklin Street is a real estate investment trust company based in Wakefield, Mass.

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