Retail Properties of America enters $270 million term loan agreement

By Wendy Van Sickle

Columbus, Ohio, July 23 – Retail Properties of America, Inc. entered into a term loan agreement on July 17 that provides for $270 million of term loans in two tranches, according to an 8-K filing with the Securities and Exchange Commission.

The agreement provides for a five-year term loan with an initial principal amount of $120 million and a seven-year term loan with and initial principal amount of $150 million.

Retail Properties has the ability to increase the five-year term loan by up to $130 million and the seven-year term loan by up to $100 million, for maximum total borrowings of $500 million.

Borrowings bear interest at Libor plus a margin that ranges from 120 basis points to 170 bps, based on leverage ratio, or 80 bps to 165 bps based on the company’s investment-grade credit rating, for the five-year term loan.

For the seven-year term loan, the margin ranges from 150 bps to 220 bps, based on leverage, and 135 bps to 225 bps, based on the investment-grade credit rating.

After entering the term loan agreement, the company entered into agreements to swap $120 million of Libor-based debt to a fixed interest rate of 1.68% through July 17, 2024 and $150 million of Libor-based debt to a fixed rate of 1.77% through July 17, 2026. Each of the swap agreements has the effective date of Aug. 15.

The company may prepay outstanding principal amounts at any time, subject to any Libor breakage costs, and, for the seven-year term loan only, a prepayment fee equal to 2% of principal amount prepaid on or before July 17, 2020, or 1% of the principal amount prepaid after July 17, 2020 but on or prior to July 17, 2021.

KeyBank NA is the administrative agent. KeyBanc Capital Markets Inc. acted as bookrunner and a lead arranger, along with Branch Banking and Trust Co., PNC Capital Markets LLC, TD Bank and Wells Fargo Bank, NA, Branch Banking, PNC Bank, TD Bank and Wells Fargo acted as co-syndication agents.

Proceeds will be used to repay outstanding debt and for general corporate purposes.

Retail Properties is an Oak Brook, Ill. owner and operator of shopping centers.

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