Franklin Street Properties, a real estate investment trust focused on institutional-quality U.S. office properties, has closed a $320 million secured credit facility with an affiliate of TPG Credit, refinancing all of its outstanding indebtedness and continuing its review of strategic alternatives.
The company used an initial drawdown of $258.5 million under the facility, net of a $16.5 million original issue discount, to repay in full its $248.9 million aggregate principal amount of outstanding debt. The facility also includes up to $45 million of delayed draw term loans, subject to certain conditions, to fund tenant improvements, leasing commissions, building upgrades, and other lender-approved uses.
The credit facility carries an initial coupon rate of 9.0% and has a stated maturity of February 26, 2029, with the option to extend for up to one year, subject to certain conditions. It includes an exit fee of 4.0% of the funded loan amount, due upon repayment, and is secured by a first-priority lien on substantially all company assets. Alter Domus (US) LLC will serve as the administrative agent.
FSP said the refinancing addresses its near-term debt maturities, providing greater financial flexibility as it continues to evaluate potential strategic alternatives to maximize shareholder value. The company remains focused on its portfolio of office properties in core markets, including Dallas, Denver, Houston, and Minneapolis.
Support: FSP was represented by Wilmer Cutler Pickering Hale and Dorr and Stifel, while the lender was represented by Paul, Weiss, Rifkind, Wharton & Garrison.
KEY QUOTES
“After considering a number of different potential strategic alternatives in consultation with our professional advisors, we concluded that refinancing our outstanding indebtedness was the best alternative available to us at this time. In addition, the Delayed Draw Term Loan feature of the Facility provides additional flexibility to allow us to lease additional space in our existing portfolio, which could enhance future value. We are pleased to have TPG as a strategic lending partner and look forward to building a long-term relationship with them.”
“However, now that our near-term debt maturity has been addressed, we are continuing our review of potential strategic alternatives. Our Board of Directors and management team remain deeply committed to continuing to explore ways to maximize shareholder value. We believe that having successfully addressed our near-term debt maturities has reduced a significant source of near-term uncertainty and avoided having to make forced or suboptimal decisions, enabling us to focus on executing property-level initiatives in what continues to be an uneven office market environment. We believe this approach best positions the Company to navigate current market conditions while preserving maximum strategic flexibility. We look forward to continuing to update the market as and when appropriate.”
George J. Carter, Chairman and Chief Executive Officer of Franklin Street Properties Corp.
“We are pleased to partner with Franklin Street Properties to provide a tailored capital solution that provides the financial flexibility needed to navigate the current market. We look forward to supporting the Board and management team as they work to enhance value for all shareholders.”
David Busker, Managing Director and Head of Commercial Real Estate Debt, TPG Credit
