Parkway locks in $125 million term loan at 2.199%, amends revolver

By Susanna Moon

Chicago, Oct. 1 - Parkway Properties, Inc. closed a $125 million five-year unsecured term loan on Friday led by Keybanc Capital Markets, Inc. and Bank of America Merrill Lynch as lead arrangers and bookrunners, according to an 8-K filing with the Securities and Exchange Commission.

KeyBank NA was the administrative agent; Bank of America, NA is the syndication agent; Wells Fargo Bank, NA is the documentation agent; and other lenders include Royal Bank of Canada, PNC Bank, NA, U. S. Bank NA and Trustmark National Bank.

Interest is initially Libor plus 150 basis points, with a spread of Libor plus 150 bps to 225 bps, based on leverage, and the term loan expires on Sept. 27, 2017.

The company may expand the loan size through an accordion feature to up to $250 million, according to a press release.

Also on Friday, the company executed two floating-to-fixed interest rate swaps totaling $125 million, locking the Libor rate at 0.699% for five years, for an initial all-in interest rate of 2.199%.

The term loan will have substantially the same operating and financial covenants as required by the company's current unsecured revolving credit facility, the release noted.

Keybank NA is the administrative agent; Bank of America, NA is the syndication agent; and Wells Fargo Bank, NA is the documentation agent. Other lenders include Royal Bank of Canada, PNC Bank, NA, U. S. Bank NA and Trustmark National Bank.

"The recent $200 million equity investment in Parkway by TPG, as well as Parkway's $250 million purchase of Hearst Tower in Charlotte, has enabled the company to pursue various financing options to fund future acquisition opportunities," David R. O'Reilly, Parkway's Executive Vice President, Chief Financial Officer and Chief Investment Officer, said in a press release.

"We believe that the unsecured term loan offers attractive pricing and will give us greater flexibility than the secured debt options as we continue to grow the company and pursue our long-term financial goals."

Revolver amendment

The company also amended its $190 million senior unsecured revolving credit facility with a consortium of eight banks on Friday led by Wells Fargo Securities, LLC and Bank of America Merrill Lynch as lead arrangers and bookrunners, the filing noted.

The amendment extends the period during which the company may value newly acquired assets at book value for purposes of determining total asset value for financial covenants to the eight fiscal quarters most recently ended from the four fiscal quarters most recently ended.

In addition, the amendment makes changes to reflect the execution of the term loan and the conversion of the company's series E convertible cumulative redeemable preferred stock.

Wells Fargo Bank, NA is the administrative agent; Bank of America, NA is the syndication agent; PNC Bank, NA, Royal Bank of Canada and KeyBank NA are the documentation agents; and other banks include JPMorgan Chase Bank, NA, Trustmark National Bank and Seaside National Bank and Trust.

Parkway Properties is a real estate investment trust specializing in the ownership of office properties. It is based in Orlando, Fla.

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