In a significant financial move, Phillips Edison & Company, Inc. (NASDAQ:PECO), a real estate investment trust specializing in grocery-anchored shopping centers, has expanded its Revolving Credit Facility to $1 billion. The company, along with its Operating Partnership, entered into a second amendment with PNC Bank and other lenders on Thursday, extending the maturity date to January 9, 2029.
This amendment, which builds on the original credit agreement from July 2, 2021, and the first amendment from May 20, 2022, maintains the principal amount and maturity date of the existing Term Loan Facility. The Revolving Credit Facility's interest rate is now set at Term SOFR or Daily Simple SOFR, with a margin ranging from 0.725% to 1.400%, dependent on Phillips Edison's credit rating, leverage ratio, and sustainability metrics. Additionally, a facility fee ranging from 0.125% to 0.300% will be charged, based on the company's credit rating.
The updated agreement also revises the sustainability pricing adjustment for the Revolving Credit Facility, which will discontinue on April 1, 2025. The Term Loan Facility's interest rate remains unaffected by these changes.
Under the Amended Credit Agreement, the Operating Partnership is allowed to request increases in the revolving credit commitments or any existing term loan, subject to certain limitations and conditions. The agreement stipulates periodic interest-only payments, with the principal due at loan maturity. It also permits prepayment of outstanding revolving and term loans without penalty.
The Amended Credit Agreement includes financial covenants that the company must adhere to, such as maintaining a maximum leverage ratio, a maximum secured leverage ratio, a minimum fixed charge coverage ratio, and minimum tangible net worth. It also sets a maximum ratio of unsecured indebtedness to unencumbered asset value and a minimum ratio of unencumbered property net operating income to interest expense on unsecured debt.
The information for this article was obtained from a recent 8-K filing with the Securities and Exchange Commission.
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