Parkway Properties cuts rate on revolving loans to Libor plus 210 bps

By Susanna Moon

Chicago, April 5 - Parkway Properties, Inc. reduced the interest rate on its $190 million senior unsecured revolving credit facility and its $10 million working capital revolver to Libor plus 210 basis points, which amounted to a rate of 2.35% as of Friday.

Interest on its loans will be Libor plus 160 bps to 235 bps, based on leverage. The unused fee is 35 bps, with a range of 25 bps to 35 bps.

The company announced the rate cut on Wednesday and provided the details in an 8-K filing with the Securities and Exchange Commission.

Parkway Properties amended its credit agreement last Friday with Wells Fargo Securities, LLC and Bank of America Merrill Lynch as the lead arrangers and bookrunners. Wells Fargo Bank, NA is the administrative agent; Bank of America, NA is the syndication agent; and KeyBank, NA, PNC Bank, NA and Royal Bank of Canada are the documentation agents. Other participating lenders include JPMorgan Chase Bank, Trustmark National Bank and Seaside National Bank and Trust. The working capital revolving credit facility was provided by PNC Bank, NA.

Financial covenants require the company to maintain its ratio of total debt to total asset value at 60% or less, its secured debt to total asset value at 50% or less and its ratio of secured recourse debt to total asset value at 10% or less.

In addition, the company may not pay dividends or make distributions with respect to its equity in excess of 90% of the company;s funds from operations, except to the extent needed to allow it to continue to qualify as a REIT for federal income tax purposes.

As previously noted, the company also extended the maturity date by two years to March 29, 2016, with an additional one-year extension option with the payment of a fee, and boosted the size of the accordion feature by $50 million to as much as $160 million.

The facilities had been set to mature on Jan. 31, 2014.

"We believe the new credit facilities better position Parkway as we seek to execute on our new strategy," James R. Heistand, president and chief executive officer of Parkway, said in the release.

Parkway Properties is a self-administered real estate investment trust specializing in the ownership of quality office properties in higher growth submarkets in the Sunbelt region of the United States. The REIT is based in Orlando, Fla.

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