Chambers Street arranges $850 million revolver, $400 million of loans

By Toni Weeks

San Luis Obispo, Calif., Oct. 1 - Chambers Street Properties and CSP Operating Partnership, LP entered into an amended, restated and consolidated credit agreement on Sept. 26 with Wells Fargo Bank, NA as administrative agent, according to an 8-K filed Tuesday with the Securities and Exchange Commission.

The $1.25 billion agreement provides the operating partnership with an $850 million unsecured revolving credit facility, a $200 million tranche A unsecured term loan and a $200 million tranche B unsecured term loan.

The revolver, which matures Jan. 15, 2018 and has a one-year extension option, includes $25 million swingline and $25 million letter-of-credit subfacilities. It replaces the operating partnership's $700 million unsecured revolver dated Sept. 13, 2012.

Interest on the revolver will be Libor plus 150 basis points to 205 bps based on Chambers Street's current leverage ratio or Libor plus 90 bps to 170 bps based on the current credit rating of Chambers Street or its operating partnership.

The tranche A term loan, which matures March 7, 2018, replaces the company's existing $200 million unsecured five-year term loan dated March 7, 2013. Interest will be fixed at 2.6385%.

The new tranche B term loan matures on Jan. 15, 2019 and bears interest at 3.274%. Proceeds of this loan were used to pay down a portion of the company's existing credit facility.

The company entered into interest rate swap agreements with Wells Fargo for both the tranche A and tranche B term loans; the coupon may thus be 20 bps less to 35 bps more than the current coupons based upon current leverage ratio or 70 bps less to 30 bps more than the current coupons based upon the current credit rating.

According to the filing, Chambers Street must maintain

• A leverage ratio of not more than 0.6;

• A fixed-charge coverage ratio of at least 1.5;

• A secured leverage ratio of not more than 0.45 for the first two years or 0.4 after that;

• An unencumbered leverage ratio of not more than 0.6;

• A ratio of unencumbered net operating income to unsecured interest expense of at least 1.75, unless the operating partnership obtains an investment-grade credit rating, in which case the requirement is eliminated;

• A minimum tangible net worth of $1,545,248,000 plus 85% of the net proceeds of certain future equity issuances; and

• An unencumbered asset value of at least $400 million.

The credit agreement may be boosted to a total of $2 billion, subject to lender participation.

Wells Fargo Securities, LLC and RBC Capital Markets are the joint lead arrangers and joint bookrunners. Royal Bank of Canada, Bank of America, NA, Bank of Montreal, Citibank, NA, JPMorgan Chase Bank, NA, Regions Bank and Union Bank, NA are the documentation agents. RBC is also the syndication agent.

The Princeton, N.J.-based company, formerly known as CB Richard Ellis Realty Trust, is a real estate investment trust.

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