Orion Office REIT amends $425 million revolver, extends maturity

By Wendy Van Sickle

Columbus, Ohio, June 29 – Orion Office REIT Inc. entered into an amendment to its credit agreement with Wells Fargo Bank, NA as administrative agent on June 29, using borrowings from its currently undrawn $425 million senior revolver to repay and retire the outstanding balance of its $175 million senior term loan, according to an 8-K filing with the Securities and Exchange Commission.

The amendment also provides Orion Office REIT LP as borrower with the option to extend the maturity of the revolver an additional 18 months to May 12, 2026 from the current scheduled maturity of Nov. 12, 2024.

Further, the amendment set the minimum unencumbered asset value maintained by the borrower at $600 million and decreased the maximum ratio of secured debt to total asset value to 0.4x from 0.45x.

It also specified that if the ratio of unsecured debt to unencumbered asset value exceeds 0.35x at the end of two consecutive fiscal quarters, the borrower will be required, within 90 days and subject to cure rights, to grant the administrative agent a first priority lien on all the properties included in the pool of unencumbered assets.

Further, the restricted payments covenant was amended to provide that the aggregate amount paid for dividends on and repurchases of shares of the company’s common stock in any fiscal year may not exceed, at all times prior to Jan. 1, 2023, 95% of funds from operations and, at all times thereafter, 100% of adjusted funds available for distribution.

Finally, if, on any day, the borrower has unrestricted cash and cash equivalents in excess of $25 million, it will be required to use such excess amount to prepay loans under the revolver.

As of March 31, the company had $23.8 million in unrestricted cash and cash equivalents. As of June 29, following the effectiveness of the amendment, $175 million of principal amount was outstanding under the revolver and $250 million was available. The company entered into an interest rate swap transaction that effectively fixes the interest rate on $175 million of principal at 3.92% per annum until Nov. 12.

Phoenix-based Orion specializes in the ownership, acquisition and management of a diversified portfolio of mission-critical and corporate headquarters office buildings in suburban markets across the United States.

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