STAG Industrial gets new revolving agreement; amends term loan A, B

By Tali Rackner

Norfolk, Va., Dec. 19 – STAG Industrial, Inc. and operating partnership STAG Industrial Operating Partnership, LP entered into a credit agreement with Wells Fargo, NA that provides for an up to $300 million five-year revolving unsecured credit facility, according to an 8-K filing with the Securities and Exchange Commission.

There is a sublimit of $30 million for swingline loans and $30 million for letters of credit. There is an accordion feature that allows the commitments to be raised up to a total of $600 million.

The revolver places the existing $200 million revolving unsecured credit facility dated Sept. 10, 2012.

Initial interest is equal to Libor plus 115 basis points. It ranges from 115 bps to 155 bps, depending on STAG’s consolidated leverage ratio.

The commitment fee ranges from 20 bps to 35 bps, also based on leverage. It is initially 20 bps.

The credit agreement contains a number of customary financial covenants, including requiring the company to maintain: A maximum consolidated leverage ratio of 60%; a maximum secured leverage ratio of 40%; maximum unencumbered leverage ratio of 60%; a maximum secured recourse debt ratio of 7.5%; a minimum fixed charge ratio of 1.5:1; a minimum unsecured interest ratio coverage of 1.75:1, and a minimum tangible net worth of not less than the sum of $996,305,000 plus an amount equal to 75% of the net proceeds of any equity issuances after Dec. 18.

As of Dec. 18, there was $211 million in principal amount outstanding under the agreement.

Wells Fargo Securities, LLC and Merrill Lynch, Pierce, Fenner & Smith Inc. served as lead arrangers and bookrunners, with Wells Fargo, NA serving as administrative agent, letter-of-credit issuer and swingline lender; Bank of America, NA serving syndication agent and a letter-of-credit issuer; and Capital One, NA, Regions Bank and Royal Bank of Canada serving as co-documentation agents. The other lenders are Citibank, NA, PNC Bank, NA, TD Bank, NA, and Raymond James Bank, NA.

Term loan A

STAG also entered into an up to $150 million seven-year senior unsecured term loan A, replacing its existing $150 million term loan.

There is an up to $50 million accordion feature on the loan, which matures on March 31, 2022.

Borrowings bear interest at Libor plus 165 bps to 270 bps with an initial spread of 165 bps.

As of Dec. 18, there was $150 million in principal amount outstanding under the term loan A agreement.

Wells Fargo Securities served as lead arranger and bookrunner on the term loan A agreement, with Wells Fargo Bank, NA serving as administrative agent.

Term loan B

In addition, STAG entered into an up to $150 million seven-year senior unsecured term loan B, amending and restating its term loan agreement dated March 21, 2014.

There is an up to $250 million accordion feature on the loan, which matures on March 21, 2021.

The new agreement eliminates the concept of a borrowing base value under the initial agreement.

The term loan B includes a delayed-draw feature that allows STAG to draw up to six advances of at least $25 million each until Dec. 18, 2015. If the company does not request advances of the $150 million of aggregate commitments by that date, the unadvanced commitments terminate and STAG must pay the lenders a commitment termination fee of 0.50% of the terminated commitments.

STAG did not make a draw at closing of the amendment and restatement and, accordingly, as of Dec. 18, no amounts were outstanding under the agreement.

Interest is equal to Libor plus 170 bps to 230 bps. Had there been borrowings outstanding as of Dec. 18, the spread would have been 170 bps.

There is an unused fee of 22.5 bps.

Wells Fargo Securities served as lead arranger and bookrunner on the term loan B agreement, with Wells Fargo Bank, NA serving as administrative agent.

STAG Industrial, Inc. is a Boston-based real estate company.

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