CommonWealth REIT Scores $750M Unsecured Credit Facility

Less than two weeks before an existing facility was to mature, the Newton, Mass.-based office and industrial REIT obtains a $750-million facility from an international consortium of banks.

CommonWealth REIT  has just entered into a new $750 million unsecured revolving bank credit facility, a deal that comes less than two weeks before the Newton, Mass.-based office and industrial REIT’s previous $750 million facility was scheduled to mature. 

Terms of the new credit facility, which has a maturity date of August 8, 2013, allow CommonWealth the option to extend the maturity date from August 8, 2013 to August 8, 2014. Under certain conditions, CommonWealth may also be eligible to double the credit facility’s capacity to $1.5 billion.

Lenders have shied away from many a REIT during the credit crunch. However, the new transaction and a previous facility that the company CommonWealth REIT secured in April 2009 show that the company has not been shut out.  “This new credit facility shows the company still has very good access to capital,” Dave Rodgers, analyst with RBC Capital Markets, told CPE. “(CommonWealth) still has investment grade rating, which should indicate the quality of its balance sheet, and the deep pool of lenders participating in the new facility similarly would speak to that quality.”

With the initial proceeds from the transaction, CommonWealth repaid the outstanding $300 million debt under the previous credit facility. But now the REIT has plenty more capital to play with. “The new credit facility gives (CommonWealth) the opportunity to acquire new properties and lease up existing ones,” Rodgers said. At the end of the second quarter this year, CommonWealth’s portfolio encompassed 521 properties and 67.5 million square feet. Last month, the REIT officially changed its name from HRPT Properties Trust.

The consortium of 28 banks participating in the new facility includes joint lead arrangers and joint bookrunners Wells Fargo Securities L.L.C. and Banc of America Securities L.L.C. It is an international group; the list of lenders encompasses Israel’s Bank Hapoalim B.M., Taiwan-headquartered Chang Hwa Commercial Bank Ltd. and Japan’s Sumitomo Mitsui Banking Corporation.