Franklin Street Properties has held the closing of an unsecured term loan with a group of banks.
The total borrowed under the term loan is USD220m.
The term loan includes an accordion feature that allows for up to USD50m of additional borrowing capacity subject to receipt of lender commitments and satisfaction of certain customary conditions. The term loan has a term of seven years that matures on 26 August 2020.
The term loan bears interest at either (i) a LIBOR based rate plus 145 to 220 basis points depending on the company’s total leverage ratio for the applicable period (LIBOR plus 165 basis points at 26 August 2013) or (ii) a rate equal to the bank’s base rate plus 45 to 120 basis points depending on the company’s total leverage ratio for the applicable period (the bank’s base rate plus 65 basis points at 26 August 2013).
Although the interest rate on the term loan is variable, the company elected to fix the base LIBOR interest rate at 2.32 per cent per annum for seven years by entering into an interest rate swap. Accordingly, based upon the company’s total leverage ratio, as of 26 August 2013, the effective interest rate on the term loan is 3.97 per cent per annum.
George Carter, president and chief executive officer of FSP, says: “We proactively decided to close this USD220m, seven-year, unsecured term loan with a fixed rate to assist us in our continuing growth plans. We anticipate using the net proceeds of this unsecured term loan to fund a portion of our pending acquisition of 1001 17th Street, Denver, Colorado, which we expect to close on 28 August 2013. With this unsecured term loan in place, as of 26 August 2013, 100 per cent of our total debt is unsecured, approximately 65 per cent of our total debt is fixed and approximately 35 per cent of our total debt is variable. We are pleased to put this unsecured term loan in place and appreciate the confidence shown in FSP by each of the participating banks.”