Essential Properties Realty Trust, Inc. Announces New $450 Million 5.5 Year Unsecured Term Loan
Essential Properties Realty Trust (NYSE: EPRT) announced the closing of an amended credit agreement, creating a new $450 million unsecured term loan facility with a 5.5-year term. The 2030 Term Loan initially bears interest at term SOFR plus a margin. The initial funding of $320 million was drawn, partly used to pay off the revolving credit facility. The remaining $130 million can be borrowed through January 2025. Swap agreements fix the initial funding's effective rate at approximately 4.99%. The loan aims to address EPRT's near-term debt needs, with strong bank support indicated.
- EPRT secured a $450 million unsecured term loan facility.
- The loan has a 5.5-year term, maturing in January 2030 if extension options are exercised.
- Initial funding of $320 million was successfully drawn.
- Part of the initial funding was used to pay off the revolving credit facility.
- Remaining $130 million can be borrowed through January 2025.
- Swap agreements fixed the effective rate at approximately 4.99%.
- The company relied on a significant amount of debt funding, which could indicate liquidity concerns.
Insights
The new $450 million unsecured term loan announced by Essential Properties Realty Trust (EPRT) is quite significant. The company’s decision to refinance and secure a long-term loan with a delayed draw feature is a strategic move to manage its debt more efficiently.
The loan’s initial rate, tied to the SOFR (Secured Overnight Financing Rate) plus a margin, ensures flexibility given current economic conditions. The company's ability to lower the effective rate to approximately
Paying off the revolving credit facility with the initial $320 million drawdown reduces immediate liquidity pressure. This restructuring also indicates a well-planned capital strategy, ensuring funds availability for future opportunities without immediate additional debt burden.
From a retail investor’s perspective, this move might suggest stability and financial prudence in managing liabilities, which can be pivotal in maintaining investor confidence, especially in the real estate sector where debt plays a significant role. However, it’s essential to monitor if the company effectively utilizes the remaining $130 million under the delayed draw feature to enhance growth.
This loan aligns with market trends of companies securing long-term funding amidst volatile interest rate environments. The decision to use a combination of delayed draw features and swaps reflects an understanding of current market dynamics, allowing the company to hedge against interest rate fluctuations while retaining flexibility in raising capital.
In the real estate investment trust (REIT) sector, securing financing with favorable terms is important for growth and operational stability. EPRT’s ability to garner participation from major financial institutions like Wells Fargo, Mizuho Americas and others is a positive indicator of its creditworthiness and market position.
For retail investors, this shows that EPRT has a solid backing from the financial community, which can translate into sustained operations and growth potential. However, investors should remain vigilant regarding how the company plans to utilize the additional funds and whether it aligns with its strategic goals.
At closing, the Company drew an initial funding amount of
Mark Patten, the Company’s Executive Vice President and Chief Financial Officer, said, “We are very pleased to execute the 2030 Term Loan, which addresses our debt capital needs for the near-term.” Mr. Patten concluded by noting, “We greatly appreciate that effectively all of our bank group participated in the 2030 Term Loan, indicating their strong ongoing commitment, support, and confidence in our Company, and we were pleased to welcome our new banking relationships.”
Wells Fargo Securities, LLC and Mizuho Americas were the Joint Bookrunners. Wells Fargo Bank, N.A. served as Administrative Agent and Wells Fargo Securities, LLC served as Sustainability Structuring Agent. BOFA Securities, Inc., BMO Capital Markets Corp., Capital One, National Association, TD Bank, N.A., and Truist Securities, Inc., served as Joint Lead Arrangers. The Bank of Nova Scotia, BNP Paribas and Regions Bank served as Documentation Agents.
About Essential Properties Realty Trust, Inc.
Essential Properties Realty Trust, Inc. is an internally managed REIT that acquires, owns and manages primarily single-tenant properties that are net leased on a long-term basis to companies operating service-oriented or experience-based businesses. As of March 31, 2024, the Company’s portfolio consisted of 1,937 freestanding net lease properties with a weighted average lease term of 14.1 years and a weighted average rent coverage ratio of 3.9x. In addition, as of March 31, 2024, the Company’s portfolio was
View source version on businesswire.com: https://www.businesswire.com/news/home/20240711529367/en/
Investor/Media:
Essential Properties Realty Trust, Inc.
Robert W. Salisbury, CFA
Senior Vice President, Head of Capital Markets
609-436-0619
investors@essentialproperties.com
Source: Essential Properties Realty Trust, Inc.
FAQ
What is the value of the new term loan secured by Essential Properties Realty Trust?
When will the 2030 Term Loan for EPRT mature?
What was the initial funding amount drawn by EPRT from the 2030 Term Loan?
What is the interest rate for the EPRT 2030 Term Loan?
How did EPRT use a portion of the initial funding from the 2030 Term Loan?
What is the effective interest rate for the initial funding amount of the 2030 Term Loan?
By when can EPRT borrow the remaining $130 million from the 2030 Term Loan?
What was the purpose of the 2030 Term Loan for EPRT?
