Resource REIT enters $100 million three-year revolving facility

By Marisa Wong

Los Angeles, May 21 – Resource REIT, Inc. wholly owned operating partnership subsidiary RRE Opportunity OP II, LP entered into a $100 million credit agreement on Thursday with a group of lenders for which BofA Securities, Inc. acted as bookrunner and lead arranger and Bank of America, NA acted as administrative agent, according to an 8-K filing with the Securities and Exchange Commission.

The credit facility is a secured revolving credit facility in the initial amount of $100 million, including $15 million available as letters of credit. The company may increase the lenders’ aggregate commitment during the term of the agreement to a maximum of $500 million.

Availability will be based on the value of a pool of eligible income-producing multifamily properties owned, directly or indirectly and from time to time, by the borrower or a wholly owned subsidiary of the borrower.

The revolver is a three-year interest-only facility with all outstanding principal due at maturity, subject to a one-year extension option.

Borrowings will bear interest at Libor plus an applicable margin ranging from 160 basis points to 220 bps, depending on the ratio of consolidated total debt to total asset value.

The borrower is also required to pay a fee to the lenders assessed on the unused portion of the facility.

The company is also subject to some financial covenants, including the following: the ratio of the company’s consolidated indebtedness to total asset value is not to exceed 65% as of the last day of each of the first six fiscal quarters ending after May 20 and 60% as of the last day of each fiscal quarter after that; consolidated secured recourse indebtedness other than the credit facility is not to exceed 5% of total asset value; consolidated fixed-charge coverage ratio is not to be less than 1.35x to 1.00x as of the last day of each of the first four fiscal quarters ending after May 20 and 1.50x to 1.00x as of the last day of each fiscal quarter after that; and tangible net worth must not be less $678.8 million, plus 75% of the net proceeds of any future equity issuances by the company or any of its consolidated subsidiaries.

Proceeds may be used for general corporate purposes, including refinancing existing debt and working capital.

The Philadelphia-based real estate investment trust owns a portfolio of suburban apartment communities.

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