Reduced interest rates, increased borrowing capacity and extended maturities among improvements
PHILADELPHIA, PA – July 13, 2016 – PREIT (NYSE: PEI) has entered into a modification and extension of its Term Loan (“2015 7-Year Term Loan”) offering increased flexibility and reduced rates to help fund the Company’s growth objectives.
The Amendment increased potential borrowing under the Agreement from $100.0 million to $250.0 million, and expanded the accordion feature of the Seven-Year Term Loan Agreement from up to $200.0 million to up to $400.0 million.
- Interest rates were lowered at all leverage levels in the pricing grid and the maturity date was extended by approximately one year, from January 7, 2021 to December 29, 2021.
- The rate in effect at the closing of the Amendment was LIBOR plus 160 basis points, a decrease of 55 basis points from the prior agreement.
- As of June 30, 2016, there was $100.0 million outstanding under the Agreement.
- The Amendment allows for deferred draws in up to four increments over the first year of the loan with respect to the additional $150.0 million available, with any commitments not drawn at the first year anniversary of the Amendment to be terminated.
We are happy to take advantage of favorable conditions in the debt market and our improved portfolio in executing a transaction that will reduce our interest expense, extend our debt maturities and provide additional capacity and flexibility to meet our near term capital requirements, said Joseph F. Coradino, CEO of PREIT. These transactions enable us to execute on the high quality, value-creating redevelopment opportunities in our pipeline, allowing us to naturally de-lever.
PREIT (NYSE:PEI) is a publicly traded real estate investment trust specializing in the ownership and management of differentiated shopping malls. Headquartered in Philadelphia, Pennsylvania, the company owns and operates over 25 million square feet of retail space in the eastern half of the United States with concentration in the Mid-Atlantic region’s top MSAs. Since 2012, the company has driven a transformation guided by an emphasis on balance sheet strength, high-quality merchandising and disciplined capital expenditures. Additional information is available at www.preit.com, on Twitter or LinkedIn.
Forward Looking Statements
This press release contains certain “forward-looking statements” within the meaning of the federal securities laws. Forward-looking statements relate to expectations, beliefs, projections, future plans, strategies, anticipated events, trends and other matters that are not historical facts. These forward-looking statements reflect our current views about future events, achievements or results and are subject to risks, uncertainties and changes in circumstances that might cause future events, achievements or results to differ materially from those expressed or implied by the forward-looking statements. In particular, our business might be materially and adversely affected by uncertainties affecting real estate businesses generally as well as the following, among other factors: our substantial debt, stated value of preferred shares and our high leverage ratio; constraining leverage, interest and tangible net worth covenants under our 2013 Revolving Facility, our 2014 Term Loans and our 2015 Term Loan; potential losses on impairment of certain long-lived assets, such as real estate, or of intangible assets, such as goodwill, including such losses that we might be required to record in connection with any dispositions of assets; changes to our corporate management team and any resulting modifications to our business strategies; our ability to refinance our existing indebtedness when it matures, on favorable terms or at all; our ability to raise capital, including through the issuance of equity or equity-related securities if market conditions are favorable, through joint ventures or other partnerships, through sales of properties or interests in properties, or through other actions; our ability to identify and execute on suitable acquisition opportunities and to integrate acquired properties into our portfolio; our partnerships and joint ventures with third parties to acquire or develop properties; our short- and long-term liquidity position; current economic conditions and their effect on employment, consumer confidence and spending and the corresponding effects on tenant business performance, prospects, solvency and leasing decisions and on our cash flows, and the value and potential impairment of our properties; general economic, financial and political conditions, including credit market conditions, changes in interest rates or unemployment; changes in the retail industry, including consolidation and store closings, particularly among anchor tenants; the effects of online shopping and other uses of technology on our retail tenants; our ability to sell properties that we seek to dispose of or our ability to obtain estimated sale prices; our ability to maintain and increase property occupancy, sales and rental rates, in light of the relatively high number of leases that have expired or are expiring in the next two years; acts of violence at malls, including our properties, or at other similar spaces, and the potential effect on traffic and sales; increases in operating costs that cannot be passed on to tenants; risks relating to development and redevelopment activities which could be subject to delays or other risks and might not yield the returns we anticipate; concentration of our properties in the Mid-Atlantic region; changes in local market conditions, such as the supply of or demand for retail space, or other competitive factors; and potential dilution from any capital raising transactions. Additional factors that might cause future events, achievements or results to differ materially from those expressed or implied by our forward-looking statements include those discussed in our most recent Annual Report on Form 10-K and in any subsequent Quarterly Report on Form 10-Q in the section entitled “Item 1A. Risk Factors.” We do not intend to update or revise any forward-looking statements to reflect new information, future events or otherwise.