iStar Financial announced that it has entered into a new $1.82 billion senior secured credit facility due October 15, 2017. The new term loan bears interest at a rate of LIBOR plus 4.5% with a 1.25% LIBOR floor and was issued at 99% of par. The new financing will be used to refinance the remaining balances of the company’s existing 2011 A-1/A-2 secured credit facilities in their entirety.
“With this transaction, we have extended various secured debt maturities to 2017 and unencumbered certain liquid assets. This new financing, together with anticipated available cash, gives us additional flexibility to address our 2013 unsecured debt maturities,” said Jay Sugarman, iStar chairman and CEO. “This financing improves our debt maturity profile and puts iStar on stronger footing, creating a five-year window for us to focus on creating value in our existing platforms.”
Outstanding borrowings under the new financing will be collateralized by a first lien on a fixed pool of approximately $2.29 billion of assets, with required minimum collateral coverage of not less than 1.25x outstanding borrowings. If collateral coverage is less than 1.375x, 100% of proceeds from principal repayments and sales of collateral will be applied to repay outstanding borrowings.
As long as collateral coverage is between 1.375x and 1.5x, 50% of proceeds from principal repayments and sales of collateral will be applied to repay outstanding borrowings. And as long as collateral coverage is greater than 1.5x, the company may retain all proceeds from principal repayments and sales of collateral. The new credit facility does not contain corporate level financial covenants.
J.P. Morgan and Barclays acted as joint physical bookrunners and, together with BofA, served as joint lead arrangers and bookrunners.
iStar Financial is a fully-integrated finance and investment company focused on the commercial real estate industry.
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