Netstreit signs $600 million sustainability-linked facility

By William Gullotti

Buffalo, N.Y., Aug. 11 – Netstreit Corp. announced the closing of an inaugural $600 million sustainability-linked senior unsecured credit facility, according to a press release on Thursday.

The facility consists of a $400 million senior unsecured revolving credit facility and a new $200 million senior unsecured term loan, featuring an additional $400 million accordion.

The revolver, due August 2026 with a one-year extension option, upsized and refinanced the company’s existing $250 million revolver scheduled to mature December 2023.

In addition to upsizing and extending the revolver, the new facility also made structural changes to some financial covenants, reduced the capitalization rate to 6.5% from 7.25% and transitioned the interest basis to SOFR from Libor.

The term loan will mature February 2028. At closing, the term loan was fully drawn and hedged through its term with an all-in rate of 3.88%.

The company’s existing $175 million senior unsecured term loan, fully hedged at an all-in rate of 1.36%, will remain outstanding through maturity in December 2024.

In alignment with the company’s ESG goals and focus on emissions reduction, the new facility contains sustainability-linked pricing terms based on its performance against a sustainability performance target focused on the portion of the company’s annualized based rent attributable to tenants with commitments or quantifiable targets for reducing GHG emissions in accordance with the standards of the Science Based Targets initiative.

“We are pleased with the closing of our credit facility, featuring the most innovative ESG-focused financing approach that any retail net lease company has undertaken. The credit facility is our largest financing to date,” remarked Andrew Blocher, Netstreit’s chief financial officer.

PNC Bank, NA is the administrative agent.

PNC Capital Markets LLC, U.S. Bank, NA and Wells Fargo Securities, LLC are the joint bookrunners and joint lead arrangers.

PNC Capital Markets also acted as advisor and sustainability structuring agent.

U.S. Bank is also serving as a co-syndication agent with Wells Fargo, NA.

Capital One, NA, Huntington National Bank, Regions Bank, TD Bank, NA, Bank of Nova Scotia and Truist Bank are the co-documentation agents.

Citizens Bank, NA, Comerica Bank and Associated Bank, NA are also participating lenders in the facility.

Netstreit is an internally managed real estate investment trust based in Dallas, specializing in acquiring single-tenant net lease retail properties.

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