Dividend Capital enters into $550 million unsecured credit agreement

By Tali Rackner

Norfolk, Va., Jan. 13 – Dividend Capital Total Realty Operating Partnership LP entered into a senior unsecured credit agreement on Tuesday providing for a $400 million revolving line of credit and $150 million term loan with Bank of America, NA as administrative agent, according to an 8-K filing with the Securities and Exchange Commission.

The $550 million credit agreement, which replaces an existing agreement, may be increased from time to time up to a total of $900 million.

The revolver contains a sublimit of $50 million for letters of credit and a sublimit of $50 million for swingline loans.

The revolver is set to mature on Jan. 31, 2019 and contains one 12-month extension option. There is an extension fee equal to 0.15% of the amount committed under the facility.

Borrowings initially bear interest at Libor plus 140 basis points. The interest rate generally ranges from Libor plus 140 bps to Libor plus 230 bps, depending on Dividend Capital’s consolidated leverage ratio.

The term loan is set to mature on Jan. 31, 2018 and contains two 12-month extension options. There is an extension fee equal to 0.125% of the amount committed under the loan.

Initial interest is Libor plus 135 bps and ranges from Libor plus 135 bps to Libor plus 220 bps, also based on leverage.

There is a quarterly fee on the revolver that equals the unused amount on a given day multiplied by either (a) 0.2% on an annualized basis if more than 50% of the revolver is being used; or (b) 0.25% on an annualized basis if less than or equal to 50% of the revolver is being used.

Until the earlier of the date on which the term loan is fully dispersed or July 11, 2015, there is a quarterly fee on the term loan equal to the unused amount on a given day multiplied by 0.25% on an annualized basis.

If Dividend Capital obtains two investment-grade ratings as further detailed in the credit agreement, it will have a one-time option to elect to convert the interest rates to a ratings grid pricing methodology, with payment of an additional facility fee.

Wells Fargo Bank, BA and PNC Bank, NA were co-syndication agents on the deal.

The company is required to maintain certain financial covenants, including consolidated leverage ratio, consolidated fixed-charge coverage ratio, consolidated tangible net worth, secured debt to total asset value, secured recourse debt to total asset value, unencumbered asset pool leverage ratio, unsecured interest coverage ratio and unencumbered property pool criteria.

Proceeds will be used for general business purpose, including refinancing of existing debt and financing the acquisition of permitted investments, including commercial properties.

As of the effective date, Dividend Capital borrowed $280 million on the revolver and $100 million on the term loan. It primarily used the proceeds to repay and replace the existing credit agreement.

Dividend Capital Total Realty is a subsidiary of Dividend Capital Diversified Property Fund Inc. The non-traded real estate investment trust is based in Denver.

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