REVOLVING CREDIT FACILITY AND TERM LOANS |
9 Months Ended |
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Sep. 30, 2025 | |
| Debt Disclosure [Abstract] | |
| REVOLVING CREDIT FACILITY AND TERM LOANS |
REVOLVING CREDIT FACILITY AND TERM LOANS The Company's revolving credit facilities and term loan consist of a $300 million senior secured revolving credit facility (the "2024 Revolving Credit Facility") and a $200 million senior secured term loan facility (the “2024 Term Loan” and, together with the 2024 Revolving Credit Facility, the “2024 Credit Agreement”) with a group of eight lenders (the "Lenders"). In July 2025, the Company amended the 2024 Credit Agreement, which introduced a leverage-based interest rate grid, and fully repaid the 2024 Term Loan. As of September 30, 2025, the 2024 Revolving Credit Facility had an outstanding principal balance of $31 million and the effective interest rate applicable was 5.89%.
On April 22, 2024, the Company entered into the 2024 Credit Agreement which originally provided for: (1) a three-year term ending in April 2027, subject to one twelve-month extension option; (2) revolving credit loans may be made to the Company in an aggregate principal amount of up to $300 million; (3) a first priority lien on no fewer than five properties with an aggregate appraised value of at least $900 million, consisting of (i) The James; (ii) 145 Front at City Square; (iii) Signature Place; (iv) Soho Lofts; and (v) Liberty Towers (collectively, the “Collateral Pool Properties”); and (4) a commitment fee payable quarterly ranging from 25 basis points to 35 basis points per annum on the daily unused amount of the 2024 Revolving Credit Facility.
On July 9, 2025, the Company entered into an amendment to the 2024 Credit Agreement with the Lenders to allow for the removal of three assets, The James, Signature Place, and 145 Front Street at City Square from the Collateral Pool Properties, provided that the proceeds from their respective sales were applied toward the full repayment of the $200 million outstanding balance under the 2024 Term Loan. The amendment also reduced the number of participating Lenders from eight to seven. Borrowings under the amended 2024 Revolving Credit Facility bear interest at a rate based on the Company's total leverage ratio, with an applicable margin ranging from 25 basis points to 180 basis points (the “Revolving Credit Applicable Rate”). The Company completed the full repayment of the 2024 Term Loan in July 2025.
The Company may request increases in the principal amount of the 2024 Revolving Credit Facility and/or new term loans under the 2024 Term Loan Facility in an aggregate amount of up to $200 million, which shall be subject to commercially reasonable syndication efforts.
With respect to borrowings under the 2024 Revolving Credit Facility, the interest rate shall be either (A) the Alternative Base Rate plus the Revolving Credit Applicable Rate, and/or (B) the Adjusted Term SOFR Rate plus the Revolving Credit Applicable Rate, and/or (C) the Adjusted Daily Effective SOFR Rate plus the Applicable Rate. As used herein:
“Alternative Base Rate” means, subject to a floor of 1.00%, the highest of (i) the rate of interest last quoted by The Wall Street Journal in the U.S. as the prime rate in effect (the “Prime Rate”), (ii) the NYFRB Rate from time to time plus 0.5% and (iii) the Adjusted Term SOFR Rate for a one month interest period plus 1%; “Adjusted Term SOFR Rate” means, subject to a floor of 0.0%, the Term SOFR Rate; and “Adjusted Daily Effective SOFR Rate” means, subject to a floor of 0.0%, for any day, the secured overnight financing rate for such business day published by the NYFRB on the NYFRB’s on the immediately succeeding business day (“SOFR”).
During the year ended December 31, 2024, the Company successfully met Sustainable KPI provisions as defined within the 2024 Credit Agreement, that resulted in a 5 basis point spread reduction for all borrowings on the Term Loan and Revolver, and a 1 basis point reduction on the commitment fee on the daily unused amount of the 2024 Revolving Credit Facility.
The General Partner and certain subsidiaries of the Operating Partnership are the guarantors of the obligations of the Operating Partnership under the 2024 Credit Agreement, and certain subsidiaries of the Operating Partnership also granted the lenders a security interest in certain subsidiary guarantors in order to further secure the obligations, liabilities and indebtedness of the Operating Partnership under the 2024 Credit Agreement.
The 2024 Credit Agreement includes certain restrictions and covenants which limit, among other things the incurrence of additional indebtedness, the incurrence of liens and the disposition of real estate properties, and which require compliance with financial ratios (prior to the Operating Partnership’s election of equity-secured financial covenants) relating to (a) the maximum total leverage ratio (65%), (b) the minimum debt service coverage ratio (1.25 times), (c) the minimum tangible net worth ratio (80% of tangible net worth as of April 22, 2024 plus 80% of net cash proceeds of equity issuances by the General Partner or the Operating Partnership), (d) the maximum unhedged variable rate debt ratio (30%), and (e) financial ratios (after the Operating Partnership's election of equity-secured financial covenants) relating to (i) the maximum total leverage ratio (60 percent), (ii) the minimum debt service coverage ratio (1.50 times), (iii) the minimum tangible net worth ratio (80% of tangible net worth as of April 22, 2024 plus 80% of net cash proceeds of equity issuances by the General Partner or the Operating Partnership), and (iv) the maximum unhedged variable rate debt ratio (30%).
As of September 30, 2025, Soho Lofts and Liberty Towers were encumbered by the Company's credit facilities, with a total carrying value of approximately $0.6 billion. The Company was in compliance with its debt covenants under the 2024 Credit Agreement as of September 30, 2025.
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