| Item 2.03. |
Creation of a Direct Financial Obligation or an Obligation Under an Off-Balance Sheet Arrangement of a Registrant |
On July 22, 2022, Piedmont Operating Partnership, LP (“Piedmont OP”), a consolidated subsidiary of Piedmont Office Realty Trust, Inc. (the “Registrant”), entered into a $200 million, delayed-draw, floating-rate, unsecured term loan facility (the “$200 Million Unsecured Term Loan Facility”). The Registrant intends to use the loan proceeds to fund, on an interim basis, the majority of the cash portion of the purchase price of 1180 Peachtree Street in Midtown Atlanta.
The term of the $200 Million Unsecured Term Loan Facility is six months, with an option to extend twice for an additional three months for a final maturity date of July 24, 2023. Piedmont OP may prepay the loan in whole or in part, at any time without premium or penalty. Piedmont OP paid customary arrangement and upfront fees to the lenders in connection with the closing of the $200 Million Unsecured Term Loan Facility.
The $200 Million Unsecured Term Loan Facility has the option to bear interest at varying levels based on either: (i) the Adjusted Term SOFR Rate (as defined in the Term Loan Agreement attached as Exhibit 10.1) for an interest period selected by Piedmont OP of one, three, or six months, or (ii) Base Rate, defined as the greater of the prime rate, the New York Federal Reserve Board Rate in effect on such day plus 1⁄2 of 1%, or Adjusted Term SOFR for a one-month period plus 1.0%; plus a stated interest rate spread based on the higher credit rating level issued for either the Registrant or Piedmont OP. The stated interest rate spread over Adjusted Term SOFR can vary from 0.80% to 1.65% based upon the then current credit rating of the Registrant or Piedmont OP, whichever is higher. As of the closing of the $200 Million Unsecured Term Loan Facility, the applicable interest rate spread on the loan was 1.00%.
Under the terms of the $200 Million Unsecured Term Loan Facility, Piedmont OP is subject to certain financial covenants that require, among other things, the maintenance of an unencumbered interest coverage ratio of at least 1.75, an unencumbered leverage ratio of at least 1.60, a fixed charge coverage ratio of at least 1.50, a leverage ratio of no more than 0.60, and a secured debt ratio of no more than 0.40.
The foregoing does not purport to be a complete description of the terms of the $200 Million Unsecured Term Loan Facility and is qualified in its entirety by reference to the Term Loan Agreement, which is attached as Exhibit 10.1 hereto and incorporated herein by reference.