Hudson Pacific taps 'strengthened' market to cut rate on revolver

By Susanna Moon

Chicago, April 5 - Hudson Pacific Properties, Inc. lowered the interest rate on its $200 million revolving secured credit facility to Libor plus 250 basis points to 325 bps, according to an 8-K filing with the Securities and Exchange Commission.

The amended interest rate is down from Libor plus 325 bps to 400 bps, depending on the company's leverage ratio, and is no longer subject to a Libor floor of 1.5%.

The company entered into amendment No. 2 to its credit agreement on Monday.

The facility still has an accordion feature for $50 million, which lifts the total availability to $250 million in some cases.

The amount available to borrow under the facility is still subject to the lesser of a percentage of the appraisal value of the company's properties that form the borrowing base of the facility and a minimum implied debt service coverage ratio.

Through the amendment, the loan-to-value threshold for office properties has been increased to 60%, up from 55%, and the debt service coverage ratio for office properties has been reduced to 1.5x from 1.6x.

The annual unused fee charged was cut to 40 bps from 50 bps.

Some restrictive covenants include the following:

• Maximum leverage ratio of 0.60:1.00;

• Minimum fixed-charge coverage ratio of 1.50:1.00, which was reduced from 1.75:1:00;

• Maximum consolidated floating rate debt ratio of 0.25:1.00;

• Maximum recourse debt ratio of 0.15:1.00; and

• Minimum tangible net worth of at least 85% of the company's tangible net worth at the closing of its initial public offering plus 75% of the net proceeds of any additional equity issuances.

"Since our credit facility was put in place in June 2010, the credit markets have strengthened and our company has executed on its acquisition strategy and operating goals," Mark Lammas, chief financial officer of Hudson Pacific, said in a press release.

"We believe the terms of this credit facility amendment reflect those important milestones, by bringing our credit facility in line with the current market and providing increased financial and operational flexibility to Hudson Pacific."

The credit agreement was secured in June 2010 for the company's initial public offering.

Hudson Pacific is a real estate company based in Los Angeles that owns, operates and acquires office properties and media and entertainment properties in select growth markets primarily in Northern and Southern California.

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