O’Melveny provides advice to PNC Bank on changes to $100 million term loan for Easterly
O’Melveny recently provided legal counsel to PNC Bank concerning adjustments to Easterly Government Properties Inc.’s US$100 million senior unsecured term loan that was initially established back in 2016. This modification, which was publicized on January 14, 2025, encompasses extending the maturity date of the term loan to January 28, 2028, and also includes the provision of two one-year extension choices where, contingent upon specific conditions, the company can prolong the maturity date as far as January 28, 2030. Moreover, this facility incorporates an expanded accordion feature that enables the company to solicit additional lender commitments amounting to a total of US$350 million, with the ability to seek up to US$250 million in additional funds.
Easterly Government Properties, Inc. (NYSE: DEA) is a real estate investment trust with a focus on acquiring, developing, and managing Class A commercial properties that are leased to the US Government. The legal representation provided to PNC Bank was spearheaded by New York Real Estate partner Malcolm Montgomery and senior counsel Lance Levine from O’Melveny.
Easterly Government Properties announced that they have amended their 2016 senior unsecured term loan agreement on January 14, 2025, by enhancing the borrowing capacity of the term loan by $100 million. This adjustment has extended the maturity date by up to five years and has established a fixed future cost of borrowing. Easterly has prolonged the maturity date of the amended 2016 term loan from January 30, 2025, to January 28, 2028. Furthermore, the company holds the option to utilize two one-year extension options based on certain conditions, allowing for a maximum extension of the maturity date to January 28, 2030. The company has also secured an increased borrowing capacity under the accordion feature from $150 million to $250 million.
In the words of Easterly’s Chief Financial and Chief Accounting Officer, Allison Marino, “We are very pleased to have amended our 2016 Term Loan under such favorable terms. Thanks to our strong banking relationships and superior credit profile, we have extended the duration of our liabilities while maintaining a strong balance sheet and long-term debt capacity. This enables us to remain focused on executing a disciplined investment strategy and delivering growth to shareholders.”
In conjunction with the Amended 2016 Term Loan, the company has engaged in an interest rate swap to effectively fix SOFR at 3.8569% annually, offering greater certainty over its interest rate exposure. Borrowings under the amended 2016 term loan will continue to incur interest at a rate of SOFR, a credit spread adjustment of 0.10%, plus a spread ranging from 1.20% to 1.70%, depending on the company’s leverage ratio. With the company’s current leverage ratio, the initial spread to SOFR for the amended 2016 term loan is set at 1.35%.
The joint lead arrangers and joint bookrunners for this amendment were PNC Capital Markets LLC, U.S. Bank National Association, and Truist Securities, Inc., while PNC Bank, National Association served as the administrative agent. Easterly Government Properties, Inc., headquartered in Washington, D.C., focuses primarily on acquiring, developing, and managing Class A commercial properties leased to the U.S. Government. With a primary aim of being the go-to partner for the United States Government, Easterly’s experienced management team brings specialized insight into the strategy and needs of mission-critical U.S. Government agencies for properties leased to such agencies either directly or through the U.S. General Services Administration (GSA). For further information on the company and its properties, visit their website.
