Item 1.01 Entry into a Material Definitive Agreement.
As previously disclosed, on March 27, 2018, Universal Health Realty Income Trust (the “Trust”) entered into a credit agreement with a syndicate of lenders and Wells Fargo Bank, National Association, as Administrative Agent, Bank of America, N.A., as Syndication Agent and Fifth Third Bank, JPMorgan Chase Bank, N.A. and SUNTRUST Bank as Co-Documentation Agents (the “Credit Agreement”). The Credit Agreement provides for a revolving credit facility in an aggregate principal amount of $300 million, including a $40 million sublimit for the issuance of standby letters of credit and a $30 million sublimit for Swingline loans. Borrowings under the facility are guaranteed by certain subsidiaries of the Trust and are secured by first priority security interests in and liens on equity interests in certain of the Trust’s wholly-owned subsidiaries. On June 5, 2020, the Trust, certain subsidiaries of the Trust listed therein, the Administrative Agent and the required lenders under the Credit Agreement entered into the first amendment (the “First Amendment”) to the Credit Agreement, pursuant to which, among other things, an additional tranche of revolving credit commitments in the amount of $50,000,000, designated as the “Revolving B Facility,” was established, thereby increasing the aggregate revolving credit commitment under the Credit Agreement to $ 350,000,000.
Borrowings under the new Revolving B Facility will bear interest annually at a rate equal to, at the Trust’s option, either LIBOR (for one, two, three, or six months) (subject to certain restrictions therein) or the Base Rate (as defined below), plus, in either case, a specified margin depending on the Trust’s total leverage ratio, as determined by the formula set forth in the Credit Agreement. The applicable margin ranges from 1.85% to 2.10% for LIBOR loans and .85% to 1.10% for Base Rate loans. The initial applicable margin is 1.95% for LIBOR loans and .95% for Base Rate loans. The Credit Agreement defines “Base Rate” as the greatest of (a) the Administrative Agent’s prime rate, (b) the federal funds effective rate plus 1/2 of 1% and (c) one month LIBOR plus 1%. The Trust will also pay a quarterly facility fee ranging from 0.15% to 0.35% (depending on the Trust’s total leverage ratio) on the aggregate principal amount of the Revolving B Facility.
The remainder of the revolving credit commitments provided under the Credit Agreement that were in effect prior to giving effect to the First Amendment, has been designated as the “Revolving A Facility,” and borrowings under the Revolving A Facility will continue to bear interest annually at a rate equal to, at the Trust’s option, either LIBOR (for one, two, three, or six months) (subject to certain restrictions therein) or the Base Rate (), plus, in either case, a specified margin depending on the Trust’s total leverage ratio, as determined by the formula set forth in the Credit Agreement. The applicable margin ranges from 1.10% to 1.35% for LIBOR loans and .10% to .35% for Base Rate loans. The current applicable margin is 1.20% for LIBOR loans and .20% for Base Rate loans. The Credit Agreement defines “Base Rate” as the greatest of (a) the Administrative Agent’s prime rate, (b) the federal funds effective rate plus 1/2 of 1% and (c) one month LIBOR plus 1%. The Trust will also pay a quarterly facility fee ranging from 0.15% to 0.35% (depending on the Trust’s total leverage ratio) on the aggregate principal amount of the Tranche A Facility of the Credit Agreement.
In connection with the execution of the First Amendment, the Trust paid an upfront fee for the lenders under the Revolving B Facility equal to 0.25% of the Revolving B Facility, as well as modification fees and certain customary fees and expenses of Administrative Agent in connection with the First Amendment.
The foregoing description of the First Amendment and the transactions contemplated thereby does not purport to be complete and is subject to, and qualified in its entirety by reference to, the full text of the First Amendment, which is attached as Exhibit 10.1 and is incorporated herein by reference.