STAG Industrial amends $100 million revolver, cutting interest rates

By Jennifer Chiou

New York, Oct. 21 - STAG Industrial Operating Partnership, LP amended its $100 million secured corporate revolving credit facility with Bank of America, NA as administrative agent, lowering the interest rate to Libor plus 225 basis points to 325 bps, according to an 8-K filed with the Securities and Exchange Commission.

The range was previously Libor plus 275 bps to 375 bps.

The borrower is the operating partnership of Boston-based real estate investment trust STAG Industrial Inc.

The amendment also modified certain other covenants, the filing noted. For example, if the company completes an additional equity offering, its ability to pay distributions or make any payments for the repurchase or redemption of its equity will increase to an amount per year that equals the greater of (i) 115% of its funds from operations, which decreases over time to 95% by March 31, 2013, or (ii) the minimum amount required for the company to qualify and maintain its status as a real estate investment trust.

In addition, the changes reduce the ratio of consolidated EBITDA to consolidated fixed charges to not less than 1.75 to 1.0 through the quarter ending June 30, 2012. This will increase to 2.0 to 1.0 for each quarter thereafter, provided that if STAG completes a preferred offering, the ratio shall be reduced to no less than 1.5 to 1.0 through the quarter ending March 31, 2012 and increasing to 1.75 to 1.0 as of each quarter thereafter, assuming that the appraisal condition for the collateral pool be reduced to 1.75 to 1.0.

The 8-K added that the amendment also increases borrowing availability under the credit facility to the lesser of the following:

• The aggregate commitment;

• Prior to satisfaction of an appraisal condition with respect to the collateral pool, 50% of the value of the borrowing base properties, and following satisfaction of an appraisal condition with respect to the collateral pool, 55% of the value of the borrowing base properties; or

• Prior to the satisfaction of an appraisal condition with respect to the collateral pool, the amount that would result in a debt service coverage ratio for the borrowing base properties of not less than 1.75x based on a 30-year amortization period, and following satisfaction of an appraisal condition with respect to the collateral pool, the amount that would result in a debt service coverage ratio for the borrowing base properties of not less than 1.6x based on a 30-year amortization period, in each case calculated using an interest rate equal to the greatest of (i) the yield on a 10-year Treasury plus 3%, (ii) 7.5% and (iii) the weighted average interest rates then in effect under the credit agreement.

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