Subsequent Events

6 Months Ended

Jun. 30, 2024

Subsequent Events [Abstract]

Subsequent Events

Subsequent Events

Eighth Amendment to Second Amended and Restated Credit Agreement

On July 25, 2024, the Operating Partnership, as “Borrower”, KeyBank and the lending institutions which are party thereto, entered into that certain Eighth Amendment to Second Amended and Restated Credit Agreement (the “Eighth Amendment”), which amends the Second Amended and Restated Credit Agreement (as amended by the Eighth Amendment, the “Amended Credit Agreement”). The Company and certain of its subsidiaries guarantee the obligations of the Operating Partnership under the Amended Credit Agreement. Capitalized terms used but not defined in this Note 16 have the meaning given to them in the Eighth Amendment or the Amended Credit Agreement, as applicable. The Eighth Amendment provides, in part, the following:

•The Operating Partnership reduced the outstanding principal balance of the 2025 Term Loan from $400.0 million to $210.0 million, and the maturity date of the reduced 2025 Term Loan was extended to July 25, 2028 (now, the “2028 Term Loan”);

•The maturity date of the Revolving Credit Facility was extended by four years from the closing date of the Eighth Amendment to July 25, 2028;

•The maximum commitment amount under the Revolving Credit Facility was reduced from $750.0 million to $547.0 million (calculated as of June 30, 2024);

•The Eighth Amendment also provides the option, subject to obtaining additional commitments from lenders and satisfying certain other customary conditions, to increase the commitments under the Revolving Credit Facility, to increase the outstanding principal balance under existing term loans and/or incur new term loans by up to approximately $400.0 million in the aggregate (for a maximum facility size of $1.3 billion).

•The interest rate with respect to drawn amounts under the Revolving Credit Facility can be based on either SOFR or Base Rate at the Operating Partnership’s election. At closing of the Eighth Amendment, the Operating Partnership had elected SOFR (interest periods for SOFR may be daily, 1 month or 3 months at the Operating Partnership’s election, with a 0.10% index adjustment in each case (“Applicable SOFR”)). The interest rate with respect to drawn amounts under the Revolving Credit Facility that constitute “SOFR Loans” (being all drawn amounts as of June 30, 2024) was increased by 0.35% from the rate in effect as of June 30, 2024 (such that the interest rate ranges between Applicable SOFR + 1.65% and Applicable SOFR + 2.55%, depending on the Company’s consolidated leverage ratio). With respect to any drawn amounts under the Revolving Credit Facility that are “Base Rate Loans” (being none as of June 30, 2024), the interest rate was increased by 0.35% from the rate in effect as of June 30, 2024 (such that the interest rate ranges between Base Rate + 0.65% and Base Rate + 1.55%, depending on the Company’s consolidated leverage ratio);

•The interest rate with respect to the 2028 Term Loan can be based on either SOFR or Base Rate at the Operating Partnership’s election. At closing of the Eighth Amendment, the Operating Partnership had elected SOFR. The interest rate for any portion of the 2028 Term Loan that is a SOFR Loan (being all outstanding amounts as of June 30. 2024) increased by 0.35%, from the rate in effect as of June 30, 2024 (such that the interest rate ranges between Applicable SOFR + 1.60% and Applicable SOFR + 2.50%, depending on the Company’s consolidated leverage ratio). The interest rate for any portion of the 2028 Term Loan that is a Base Rate Loan (being none as of June 30, 2024) increased by 0.35%, from the rate in effect as of June 30, 2024 (such that the interest rate ranges between Base Rate + 0.60% and Base Rate + 1.50%, depending on the Company’s consolidated leverage ratio);

•The availability under the Revolving Credit Facility (the “Borrowing Base”) is based, in part, on a stipulated Capitalization Rate for the assets constituting Pool Properties. Prior to the Eighth Amendment, the Capitalization Rate was 7% for all of the Company’s Pool Properties (without regard to the type of asset). Pursuant to the Eighth Amendment, the Capitalization Rate for industrial assets is now 6% and the Capitalization Rate for office assets is now 8%;

•The Borrowing Base was also redefined in the Eighth Amendment such that it is determined as the sum of:

a.for industrial assets, the lesser of (i) sixty percent (60%) of the value of all Pool Properties that are industrial properties calculated using the applicable Capitalization Rate (i.e., 6%, as noted above) and the annualized Net Operating Income for the prior quarter from all such Pool Properties that are industrial properties; or (ii) a loan amount which would provide a modified debt service coverage ratio for the industrial assets of 1.25:1.00 (based on an imputed interest rate equal to the greater of the 10-year U.S. Treasury rate plus 2.25%, and 5.0%, and imputed amortization on a 30-year schedule, see definition of Industrial UAP DSCR in the Eighth Amendment); and

b.for office assets, the lesser of (i) fifty percent (50%) of the value of all Pool Properties that are office properties calculated using the applicable Capitalization Rate (i.e., 8%, as noted above) and the annualized Net Operating Income for the prior quarter from all such Pool Properties that are office properties; or (ii) a loan amount which would provide a modified debt service coverage ratio for the office assets of 1.45:1.00 (based on an imputed interest rate equal to the greater of the 10-year U.S. Treasury rate plus 2.75%, and 6.5%, and imputed amortization on a 30-year schedule, see definition of Office UAP DSCR in the Eighth Amendment).

•In connection with the Eighth Amendment, the Operating Partnership has entered into certain Interest Rate Swaps, in the form of forward-starting, floating to fixed SOFR interest rate swaps with a notional amount of $550.0 million. These swaps become effective July 1, 2025, and mature July 1, 2029 and have the effect of converting SOFR to a weighted average fixed rate of interest payable by the Operating Partnership of 3.58%. These hedges are in excess of the hedging requirements under the Amended Credit Agreement.

Declaration of Dividends and Distributions

On August 6, 2024, the Board declared an all-cash dividend for the third quarter in the amount of $0.225 per common share and an all-cash distribution in the amount of $0.225 per OP Unit. Such dividend is payable on or about October 17, 2024 to shareholders and holders of OP Units of record as of September 30, 2024.