Forest City expands revolver to $600 million, adds $335 million loan

By Tali Rackner

Norfolk, Va., May 5 – Forest City Realty Trust, Inc. exercised a portion of the accordion feature of its unsecured credit facility, raising the total facility to $600 million from $500 million, according to a press release.

In addition, the company closed a new credit agreement, which provides for a $335 million five-year term loan facility to address the 2017 mortgage maturity on the company's interest in the New York Times building, a 52-story, Renzo Piano-designed office building in midtown Manhattan.

The revolving credit facility runs through November 2019 and includes two six-month extension options, as well as an accordion feature allowing the facility to be increased to a maximum of $750 million.

Interest is Libor plus 160 basis points and is anticipated to drop to Libor plus 150 bps based on the company's improved leverage ratio at March 31.

The $335 million term loan facility is anticipated to be priced at Libor plus 145 bps based on the company's leverage ratio at March 31, and must be drawn by Nov. 30, 2016 or the lenders' commitments expire. Interest ranges from Libor plus 130 bps to 220 bps.

Certain financial covenants require Forest City to maintain: (a) a maximum total leverage ratio of 65% on or prior to Dec. 31, 2017 and 60% subsequent to Dec. 31, 2017; (b) a maximum secured leverage ratio of 55% on or after March 31, 2016 and prior to Jan. 1, 2019, and 50% subsequent to Dec. 31, 2018; (c) a maximum secured recourse leverage ratio of 15% on or after March 31, 2016; (d) a minimum fixed charge coverage ratio of 1.5 times on or after March 31, 2016; (e) a maximum unsecured leverage ratio of 60% on or after March 31, 2016 and (f) a minimum unencumbered interest coverage ratio of 1.5 times on or after March 31, 2016 and prior to Jan. 1, 2018, and 1.75 times subsequent to Dec. 31, 2017.

Forest City intends to draw on the term loan facility in the fourth quarter of 2016 and, together with additional cash, address the maturity on the New York Times building by year-end.

Merrill Lynch, Pierce, Fenner & Smith Inc. and PNC Capital Markets LLC acted as joint lead arrangers and bookrunners for the revolver and new term loan facility. Bank of America, NA is the administrative agent and PNC Bank, NA is the syndication agent.

Forest City is a Cleveland-based real estate company.

© 2015 Prospect News.
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