Business Context and Reporting Period
This Form 8-K filing by Gladstone Commercial Corporation (Gladstone Commercial Corp) reports a material definitive agreement entered into on December 28, 2010. The Company, through its wholly-owned subsidiary Gladstone Commercial Limited Partnership, executed a new credit facility to replace an expiring line of credit.
Key Financial Metrics and Debt Structure
- New Facility Amount: $50 million senior secured revolving credit facility.
- Expansion Option: The facility may be expanded up to $75 million upon satisfaction of certain conditions.
- Term: Three years.
- Interest Rate: LIBOR plus an applicable margin of up to 300 basis points, dependent on leverage.
- Fees: An annual fee of 25 basis points on the $50 million commitment and an upfront fee of 75 basis points on the $50 million commitment.
- Lenders: Capital One, N.A. (Administrative Agent) and Branch Banking and Trust Company (BB&T).
Material Changes Versus Prior Period
The new agreement replaces the Senior Secured Revolving Credit Agreement dated December 29, 2006, which had a $50 million capacity and was scheduled to mature on December 29, 2010. The prior agreement was with KeyBank National Association, N.A., as agent. The filing explicitly states that no material early termination penalties or fees were incurred in connection with the repayment of the prior line of credit.
Outlook, Risks, and Management Commentary
The filing does not provide specific forward-looking guidance, management commentary on future performance, or a discussion of risks beyond the standard incorporation of the full credit agreement text. The primary focus is the structural refinancing of the company's revolving credit facility to maintain liquidity and extend the debt maturity profile by three years.
Key Facts for Investor Verification
- Verify the specific leverage ratios required to trigger the interest rate margin adjustments (up to 300 basis points).
- Confirm the conditions precedent required to exercise the expansion option from $50 million to $75 million.
- Review the full text of the Credit Agreement (Exhibit 10.1) for covenants and default provisions not detailed in the summary.
- Confirm the total upfront cost of the refinancing (75 basis points on $50 million equals $375,000).