Physicians Realty Trust, a self-managed healthcare real estate investment trust, entered into a third amended and restated credit agreement, extending the maturity date of the credit agreement from Sept. 18, 2022, to Sept. 24, 2025 (extendable by two six-month periods). In addition, the credit agreement reduces the interest rate margins, increases the amount of commitments under the revolving credit facility from $850 million to $1 billion and modifies certain covenants and terms thereunder to provide the company and its subsidiaries (including an operating partnership) with greater flexibility.
KeyBank served as administrative agent for the amended credit facility, while KeyBanc Capital Markets, BMO Capital Markets and Citizens Bank served as lead arrangers and co-book runners and BMO Capital Markets and Citizens Bank served as co-syndication agents and the lenders party thereto.
The credit agreement continues to contain a term loan facility in the aggregate principal amount of $250 million, with a maturity date of June 10, 2023. The credit agreement also includes a swingline loan sub-facility and a letter of credit sub-facility, each for up to 10% of the aggregate revolving loan commitments under the credit agreement. The credit agreement provides an accordion feature permitting the operating partnership to increase borrowing capacity by up to an additional $500 million, subject to customary terms and conditions, resulting in a potential maximum borrowing capacity of $1.75 billion (an increase from $1.6 billion under the prior credit agreement).
Pursuant to the credit agreement, borrowings will bear interest on the outstanding principal amount at a rate equal to LIBOR plus 0.725% to 1.4% (a reduction from 0.775% to 1.45%) in respect to the revolving credit facility and LIBOR plus 0.85% to 1.65% (unchanged) in respect to the term loan facility. The credit agreement also provides for borrowing at a base rate plus 0% to 0.4% (a reduction from 0% to 0.45%) in respect to the revolving credit facility and at a base rate plus 0% to 0.65% (unchanged) in respect to the term loan facility. In each case, the applicable interest rate margin will be determined by the current credit rating of the operating partnership. The credit agreement includes customary LIBOR replacement terms. The credit agreement also includes a sustainability component whereby the revolving credit facility pricing can be reduced upon the company’s achievement of certain sustainability ratings, as determined by an independent third-party evaluation.
“We appreciate the strong support and great relationships we’ve built with our existing lenders, all of whom have elected to participate in this amendment,” Jeff Theiler, executive vice president and CFO of Physicians Realty Trust, said. “In addition to extending the maturity date of the revolving component of the credit facility to 2025, this transaction reduces interest costs and provides additional flexibility to help support the company’s growth.”
