American Realty temporarily eases covenants, adds others, ups pricing

By Marisa Wong

Madison, Wis., Nov. 7 - American Realty Capital Properties, Inc., through operating partnership ARC Properties Operating Partnership, LP, amended its credit agreement with Wells Fargo Bank, NA as administrative agent to permit transactions relating to the company's merger with Cole Real Estate Investments, Inc.

The amendment modifies, for a limited time following the effectiveness of the amendment, some financial covenant levels to be less restrictive.

In addition, the amendment increases the cross-default threshold before an event of default occurs.

The amendment also adds financial covenants to the credit agreement related to the company's total unencumbered asset value ratio and availability and, during the limited period, provides for more restrictive negative covenants, including additional restrictions on the company's ability to complete further acquisition transactions and make restricted payments.

For the limited period, loans will accrue interest at an increased rate, with the applicable margin ranging from 225 basis points to 300 bps, based on the company's consolidated leverage ratio. At the expiration of the limited period, the interest rate will revert back to existing pricing levels.

Under the amended agreement, some lenders agreed to provide an additional $210 million of incremental term loan commitments, bringing the total commitments under the credit agreement to $1.7 billion. The credit agreement contains an accordion feature that can expand the facility by an additional $800 million.

American Realty entered into the sixth amendment to its credit agreement on Nov. 4.

The real estate investment company is based in New York.

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