NEW YORK, March 17, 2011 /PRNewswire via COMTEX/ --
iStar Financial Inc. (NYSE: SFI) announced today that it has entered into a new $2.95 billion senior secured credit agreement providing for two tranches of term loans: a $1.50 billion A-1 tranche due June 28, 2013, which bears interest at a rate of LIBOR plus 3.75%, and a $1.45 billion A-2 tranche due June 30, 2014, which bears interest at a rate of LIBOR plus 5.75%. Both tranches include a LIBOR floor of 1.25%.
"The financing announced today marks another important step in iStar's strategy to simplify its capital structure and strengthen its balance sheet," said Jay Sugarman, iStar's chairman and chief executive officer. "With the refinancing of our bank facilities behind us, we believe the Company is well-positioned to maximize value within our existing portfolio and make investments where we see attractive risk-adjusted returns."
Proceeds from the new financing will be used to refinance the Company's existing secured bank facilities due in June 2011 and 2012, to repay a portion of the Company's unsecured debt maturing in 2011 and for other corporate purposes. Outstanding borrowings under the new financing will be collateralized by a first lien on a fixed pool of approximately $3.69 billion of assets. Proceeds from principal repayments and sales of collateral will be applied to amortize outstanding borrowings, beginning with the A-1 tranche.
The financing provides for minimum cumulative amortization requirements on the A-1 tranche as follows: $200.0 million by December 30, 2011, $450.0 million by June 30, 2012, $750.0 million by December 31, 2012 and $1.50 billion by June 28, 2013. The A-2 tranche will begin amortizing after the repayment in full of the A-1 tranche, with minimum cumulative amortization payments of $150.0 million due six months after payment in full of the A-1 tranche, and additional payments of $150 million due by each six month anniversary thereafter until maturity.
The new credit agreement contains covenants relating to the collateral, including a covenant to maintain collateral coverage of not less than 1.25x outstanding borrowings, and covenants relating to the provision of information, restricted payments and other customary matters; however, the facilities contain no corporate level financial covenants such as minimum net worth, fixed charge coverage or minimum unencumbered assets covenants.
J.P. Morgan Securities LLC, Barclays Capital and RBS Securities, Inc. acted as joint lead arrangers and joint bookrunners for the new financing.
iStar Financial Inc. (NYSE: SFI) is a fully-integrated finance and investment company focused on the commercial real estate industry. The Company provides custom-tailored investment capital to high-end private and corporate owners of real estate and invests directly across a range of real estate sectors. The Company, which is taxed as a real estate investment trust ("REIT"), has invested more than $35 billion over the past two decades. Additional information on iStar Financial is available on the Company's website at www.istarfinancial.com.
SOURCE iStar Financial Inc.