CBL Properties has closed on a new $1.18 billion senior secured facility, which includes a fully-funded $500 million term loan and a revolving line of credit with total borrowing capacity of $685 million, the Chattanooga-based shopping center developer announced Wednesday.
“We are pleased to close the new bank facility, which has been a top priority for us,” said Stephen Lebovitz, CBL’s chief executive officer. “This successful transaction underscores the confidence that the lending community and our bank group have in CBL and our business. We appreciate their partnership and strong support as we execute our strategy and position CBL for a strong future.”
The facility is secured by 14 of CBL’s properties, including Northgate Mall in Chattanooga.
The new facility matures in July 2023 and bears a floating interest rate of 225 basis points over LIBOR, the benchmark rate banks offer to lend funds to one another.
The $500 million term loan balance will be reduced by $35 million per year, paid in quarterly installments. The facility replaces all of the company’s prior unsecured bank facilities, which totaled $1.795 billion including three unsecured term loans totaling $695 million and three unsecured revolving lines of credit with aggregate capacity of $1.1 billion with an October 2020 maturity.
At closing, the company utilized its new line of credit to reduce the principal amount of term loans by $195 million. After this utilization, the new line of credit had an outstanding balance of $419.8 million, the company said.
Farzana Khaleel, CBL’s executive vice president and chief financial officer, said the company has accomplished a number of important goals with the closing.
“First, we have removed near-term financing risk, with no unsecured debt maturities until December 2023,” she said. “This significant lengthening of our maturity schedule provides us with a clear runway to execute our business plan of redeveloping former department stores and transforming our properties into suburban town centers.”
Also, Khaleel said, CBL has meaningfully enhanced its liquidity and financial flexibility, particularly when coupled with the increased free cash flow created through our dividend adjustment.
“Finally, the new facility is simplified and right-sized, removing inflexible covenants and reducing the cost expended for unused and unneeded excess capacity,” she said.
CBL announced the debt refinancing after the market closed Wednesday. So far in 2019, CBL shares are up nearly 24.5 percent to close Wednesday at $2.39 a share. But CBL is still trading 54.9 percent below where its year-ago level.