Hudson Pacific ups revolver to $300 million, adds $150 million loan

By Susanna Moon

Chicago, Sept. 29 – Hudson Pacific Properties, Inc. said it amended its unsecured revolving credit facility, lifting the size to $300 million and adding a $150 million five-year unsecured term loan.

Interest on the revolving loans will be Libor plus 115 basis points to 155 bps, based on leverage. Interest on the term loan will be Libor plus 130 bps to 190 bps.

If the company obtains a credit rating for its senior unsecured long-term debt, it may make an irrevocable change to Libor plus 87.5 bps to 165 bps for the revolver and to Libor plus 90 bps to 190 bps for the term loan, based on the company’s credit rating, according to a company press release.

The $150 million term loan was fully drawn at closing with proceeds used to repay a $95 million loan secured by the company’s 505 First Street & 83 King properties, and the remaining $55 million used toward the repayment its previous revolver, the company said.

Hudson Pacific continues to be the borrower under the new facility, and the company and all subsidiaries that own unencumbered properties will continue to provide guaranties unless the company obtains and maintains a credit rating of at least BBB- from Standard & Poor’s or Baa3 from Moody’s Investors Service, in which case the guaranties are not required except under limited circumstances, the company noted.

The company may upsize the revolver and term loan as long as the total commitments under both facilities do not exceed $700 million.

The facility fee is 20 bps to 35 bps or, if the company makes the credit rating election, 12.5 bps to 30 bps. Unused amounts are no longer subject to a separate fee.

The restrictive covenants include the following:

• A maximum leverage ratio of 0.6 times;

• A minimum fixed charge coverage ratio plus of 1.5 times;

• A maximum secured debt leverage ratio of 0.6 times for the first year of the facility and 0.55 times after that;

• A maximum unencumbered leverage ratio of 0.6 times;

• A minimum unsecured interest coverage ratio of 1.6 times; and

• A maximum recourse debt ratio of 0.15 times.

In addition, the facility also contains limits on dividend payouts and distributions and certain types of investments outside of the company’s primary business.

At closing, the company could borrow up to $300 million, with $95 million drawn.

The company amended its $250 million unsecured revolving credit facility.

“Since our credit facility was last amended in August 2012, the credit markets have improved and our company has continued to execute on its growth objectives,” Mark Lammas, chief financial officer of Hudson Pacific, said in a press release.

“We believe the terms of this amended and restated credit facility and new unsecured term loan reflect the improved credit market conditions and provide us with increased financial and operational flexibility to continue to grow our business.”

Hudson Pacific is a Los Angeles-based real estate investment trust focused on office and media and entertainment properties in California.

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