Glimcher Realty Trust recently amended and increased its existing credit facility for more flexibility, Mark Yale, cfo, said. The company bumped up its KeyBank-led revolver from $300 million to $470 million and extended the loan's tenor by a year, but was still able to get better pricing and relax some financial covenants.
The favorable bank market and improved pricing on the amended credit were both factors in Glimcher's decision to increase its borrowing, Yale said. Pricing on the credit is tied to a grid based on the company's ratio of debt to total asset value and can range from LIBOR plus 95 basis points to LIBOR plus 140 basis points. It is currently priced around LIBOR plus 105 basis points, down from its previous LIBOR plus 125 basis points. Yale said the amended covenants affect the capitalization rate used to determine total asset value and leverage calculations.
The increased borrowing is not meant to increase leverage, but rather enhance borrowing flexibility, he said. The credit has the option to be further increased to $600 million at any time, according to a filing with the Securities and Exchange Commission. The funds will be used to back redevelopment, acquisition and development opportunities, as well as for corporate purposes.
"We're pruning our mall portfolio," Yale said, explaining that the Columbus, Ohio-based real estate investment trust is selling off some lower tier malls to upgrade the quality of the portfolio. The company announced in May it was selling off five of its regional mall properties it considered non-core assets, including properties in North Carolina, Alabama, Florida and two in Texas. "Unfortunately, timing is never perfect and there are situations where we might need the money before we're done selling off the malls."