Easterly Government Properties obtains $400 million revolver

By Toni Weeks

San Luis Obispo, Calif., Feb. 11 – Easterly Government Properties, Inc. subsidiary Easterly Government Properties LP entered into a $400 million senior unsecured revolving credit facility on Wednesday, according to an 8-K filing with the Securities and Exchange Commission.

The credit facility includes a $250 million accordion feature.

Borrowings will bear interest at Libor plus 140 basis points to 190 bps based on leverage. If the parent company achieves an investment-grade rating, the margin over Libor will drop to 87.5 bps to 170 bps. There is a facility fee of 12.5 bps to 30 bps, also based on leverage.

The facility requires the maintenance of several financial covenants by the parent guarantor, including

• A maximum leverage ratio of not greater than 60%;

• A maximum secured debt leverage ratio of not greater than 40%;

• A maximum secured recourse debt leverage ratio of not greater than 15%;

• A minimum tangible net worth of not less than the sum of (i) $460,935,750 plus (ii) an amount equal to 75% times the net cash proceeds of all issuances and primary sales of equity interests of the parent guarantor or the borrower after closing;

• A maximum dividend payout ratio equal to or less than 95%; and

• A minimum fixed-charge coverage ratio of not less than 1.5 times.

The agreement also includes unencumbered asset financial covenants, including a maximum unsecured leverage ratio of not greater than 60% and a minimum unencumbered asset debt service coverage ratio of not less than 1.75 times.

Citibank, NA is the administrative agent. Raymond James Bank, NA and Royal Bank of Canada are co-syndication agents. Citigroup Global Markets Inc., Raymond James Bank and RBC Capital Markets are the joint lead arrangers and joint bookrunning managers.

Based in Washington, D.C., Easterly intends to acquire and make real estate investments in a range of asset classes. The company focus will be on the development and management of commercial properties that are leased to government agencies.

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