Inland Real Estate ups credit facility by $125 million to $475 million

By Rebecca Melvin

Concord, N.H., Feb. 9 – Inland Real Estate Income Trust Inc. raised commitments under its credit agreement with KeyBank NA as administrative agent to $475 million from $350 million, according to an 8-K filed with the Securities and Exchange Commission.

The second amended and restated credit agreement was entered into on Feb. 3.

KeyBanc Capital Markets Inc., PNC Capital Markets LLC and BofA Securities, Inc. are joint lead arrangers of the credit agreement, which consists of a $200 million revolver and a $275 million term loan, which was boosted from $150 million.

The revolving credit facility includes a sublimit of $25 million for swingline loans and a sublimit of $25 million for letters of credit.

The company has the ability to increase the size of the credit facility up to a total of $825 million, subject to certain conditions.

Proceeds are for general corporate purposes of the company and subsidiaries, including debt repayment, property acquisitions and permitted investments, capital expenditures, development, redevelopment, capital reserves and working capital.

The credit facility is guaranteed by some subsidiaries of the company including each of the subsidiaries that owns or leases any of the properties included in the pool of unencumbered properties comprising the borrowing base. Additional properties may be added and removed from the pool so long as at any time there are at least 15 unencumbered properties with an unencumbered pool value of $300 million or more.

The revolver matures Feb. 3, 2026, with a one-year extension option, subject to the payment of an extension fee and some other conditions. The term loan matures on Feb. 3, 2027.

Borrowings under the revolver bear interest at SOFR plus a margin ranging from 130 basis points to 210 bps and under the term loan at SOFR plus 125 bps to 205 bps, in each case depending on the company’s leverage ratio.

Also on Feb. 3, the company entered into interest rate swaps with Bank of America, NA, Fifth Third Bank and PNC Bank, NA to mitigate risk associated with rising interest rates on $275 million of its floating-rate debt. The swap has a Feb. 3, 2027 termination date. The swap effectively fixed the SOFR-based variable rate on the credit agreement at a blended fixed rate of 1.758%.

Beginning on April 1, the company will make monthly fixed-rate payments to the dealers at a blended interest rate of 0.1465%, calculated on a notional amount of $275 million, while the dealers will be obligated to make monthly floating-rate payments to the company based on U.S. dollar, CME term SOFR, referencing the same notional amount.

The company will be required to pay interest only, on a monthly basis in arrears, during the term of the credit facility, with all outstanding principal and unpaid interest due upon termination of the revolver or term loan, as applicable. The company may prepay the credit facility, in whole or in part in an amount not less than $1 million, at any time without fees or penalty.

The credit facility also requires the maintenance of some financial covenants.

Until the company makes the ratings-based pricing election, it must pay an unused fee of 25 bps for less than 50% of the revolver being used or 15 bps if 50% or more of the revolver is being used. After the company makes the ratings-based pricing election, the revolver unused fee no longer accrues, and the company pays instead an annual facility fee of 12.5 bps to 30 bps, depending on the company’s credit rating.

For letters of credit, the company must also pay KeyBank an issuance fee of 12.5 bps. The company must thereafter pay a facility letter-of-credit fee on each outstanding letter of credit equal to the face amount of the letter of credit multiplied by the applicable SOFR margin.

The company currently has $19.3 million outstanding under the revolver and $275 million outstanding under the term loan.

Inland is a real estate investment trust based in Oak Brook, Ill.

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