Armada Hoffler increases facility to $550 million, extends maturities

By Marisa Wong

Los Angeles, Oct. 6 – Armada Hoffler Properties, Inc. announced it amended and restated its existing $355 million unsecured credit facility, increasing the capacity to $550 million, according to a press release.

Operating partnership Armada Hoffler, LP is the borrower, and Armada Hoffler Properties is parent guarantor under the third amended and restated credit agreement dated Aug. 23, according to an 8-K filed Thursday with the Securities and Exchange Commission.

The credit facility is comprised of a $250 million unsecured revolving line of credit and a $300 million unsecured term loan.

Additionally, the credit facility includes an accordion option to increase the total capacity to $1 billion.

The revolving line of credit and term loan now mature on Jan. 22, 2027 and Jan. 21, 2028, respectively. The revolver and term loan were previously set to mature on Jan. 24, 2024 and Jan. 24, 2025, respectively.

The revolver includes two six-month extension options, subject to a 0.075% extension fee.

The revolver bears interest at term SOFR plus a margin ranging from 130 basis points to 185 bps. The term loan bears interest at term SOFR plus 125 bps to 180 bps. The applicable margin varies based on the operating partnership’s total leverage.

The borrower must also pay an unused commitment fee of 15 bps or 25 bps.

If the operating partnership attains investment-grade ratings from both S&P Global Ratings and Moody’s Investors Service, it may elect to have interest rates calculated based on those ratings.

The amended and restated credit facility contains positive structural changes to some financial covenants and includes a sustainability-linked pricing component that potentially reduces the applicable interest rate margin, according to the release.

According to the 8-K filing, the updated financial and affirmative covenants and other restrictions include: total leverage ratio of not more than 60% (or 65% for the two consecutive quarters following any acquisition with a purchase price of at least $100 million, but only up to two times during the term of the credit facility); ratio of adjusted EBITDA to fixed charges of not less than 1.50 to 1.0; tangible net worth of not less than the sum of $825.2 million and an amount equal to 75% of the net equity proceeds received by the company after June 30; ratio of secured indebtedness (excluding the credit facility if it becomes secured indebtedness) to total asset value of not more than 40%; ratio of secured recourse debt (excluding the credit facility if it becomes secured indebtedness) to total asset value of not more than 20%; total unsecured leverage ratio of not more than 60% (or 65% for the two consecutive quarters following any acquisition with a purchase price of at least $100 million, but only up to two times during the term of the credit facility); unencumbered interest coverage ratio of not less than 1.75 to 1.0; maintenance of a minimum of at least 15 unencumbered properties with an unencumbered asset value of not less than $500 million at any time; and minimum occupancy rate for all unencumbered properties of not less than 80% at any time.

The operating partnership intends to use future borrowings under the credit facility for general corporate purposes, including funding acquisitions, mezzanine lending and development and redevelopment of properties in the company’s portfolio and for working capital.

As of Sept. 30, there was $36 million outstanding under the revolver and $300 million outstanding under the term loan.

Bank of America will continue to act as the administrative agent for the credit facility.

BofA Securities, Regions Capital Markets and PNC Capital Markets will continue to act as joint lead arrangers, with BofA Securities as left lead arranger and Regions Capital Markets and PNC Capital Markets as joint right lead arrangers.

M&T Bank and TD Bank will act as documentation agents.

Atlantic Union Bank and Synovus Bank acted as participants.

Armada Hoffler is a Virginia Beach, Va.-based real estate investment trust focused on retail and multifamily properties located primarily in the Mid-Atlantic and Southeastern United States.

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