Associated Estates enters into $350 million amended, restated revolver

By Marisa Wong

Madison, Wis., Jan. 17 - Associated Estates Realty Corp. entered into an amended and restated credit facility on Jan. 12 that will replace its $250 million revolving credit facility, according to an 8-K filing with the Securities and Exchange Commission.

The new revolver allows for borrowings of up to $350 million. There is a $50 million accordion and a $35 million letter-of-credit sublimit.

The facility, which is due Jan. 11, 2016, has a one-year extension option.

Interest is equal to Libor plus a spread of 165 basis points to 240 bps, based on a financial ratio. The initial spread is 165 bps.

There is a commitment fee on the unused portion of the facility equal to either 25 bps or 30 bps per year, depending on the amount borrowed.

If and when Associated Estates obtains investment-grade ratings, the interest rate spread will range from 105 bps to 185 bps, and the commitment fee will be replaced with a facility fee of 20 bps to 45 bps, also based on ratings.

The revolver contains financial covenants that include a maximum debt limitation and ratios related to net worth, leverage, fixed charge coverage, unencumbered interest coverage and dividend payments. The facility also includes other customary representations, warranties and covenants.

PNC Capital Markets, LLC and Wells Fargo Securities, LLC are the co-lead arrangers, and PNC Bank, NA is the administrative agent. Wells Fargo Bank, NA is the syndication agent. Bank of America, NA, Citibank, NA and RBS Citizens, NA are documentation agents. The other participating banks are Raymond James Bank, FSB and U.S. Bank, NA.

According to the filing, certain changes have been made to the Richmond Heights, Ohio-based real estate investment trust's $125 million senior unsecured term loan to conform to changes made in connection with the new revolver, including a reduction in the definition of capitalization rate (used to determine leverage) to 6.75% from 7.25%.

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