Business Context and Reporting Period
Company: Empire State Realty Trust, Inc. and Empire State Realty OP, L.P.
Filing Type: Form 8-K (Current Report)
Date of Report: August 29, 2017
Event: Entry into a Material Definitive Agreement and Creation of a Direct Financial Obligation.
Key Financial Metrics and Facility Details
The filing details the establishment of an amended and restated senior unsecured revolving credit and term loan facility (the "Facility").
- Total Facility Amount: Up to $1.365 billion (comprising a $1.1 billion revolving credit facility and a $265 million term loan facility).
- Expansion Capacity: May be increased to a maximum aggregate principal amount of $1.75 billion.
- Drawdown Status: The $265 million term loan facility was borrowed in full at closing.
- Interest Rates (at closing):
- Revolving Credit: 1.10% + LIBOR.
- Term Loan: 1.20% + LIBOR.
- Fees: 0.15% facility fee on undrawn commitments under the revolving credit facility.
- Maturity Dates:
- Revolving Credit: August 29, 2021 (extendable by two six-month periods).
- Term Loan: August 29, 2022.
Material Changes Versus Prior Period
This Facility amends and restates the credit facility originally dated January 23, 2015. The filing does not provide specific comparative financial metrics (revenue, profit, cash flow) for the prior period, as the document focuses exclusively on the terms of the new debt agreement.
Financial Covenants and Risks
The Facility includes strict financial covenants and customary events of default.
Financial Covenants
- Total indebtedness to total asset value: Not to exceed 60%.
- Total secured indebtedness to total asset value: Not to exceed 40%.
- Tangible net worth: Not less than $1,249,392,000 plus 75% of net cash proceeds from equity issuances.
- Adjusted EBITDA to consolidated fixed charges: Not less than 1.50x.
- Unencumbered property NOI to unsecured interest expense: Not less than 1.75x.
- Total unsecured indebtedness to unencumbered asset value: Not to exceed 60%.
Risks and Contingencies
Events of default include non-payment, breach of covenants, cross-defaults, bankruptcy, loss of REIT qualification, and change of control. The proceeds are designated for working capital needs and general corporate purposes.
Investor Verification Checklist
- Verify the current leverage ratio to ensure compliance with the 60% total indebtedness to asset value covenant.
- Confirm the current tangible net worth against the $1.249 billion threshold plus equity proceeds.
- Review the full Amended and Restated Credit Agreement (Exhibit 10.1) for specific definitions of "Adjusted EBITDA" and "Total Asset Value."
- Monitor the company's ability to extend the revolving credit facility maturity beyond August 2021 if needed.
- Assess the impact of the 0.15% facility fee on undrawn commitments on overall liquidity costs.