Item 2.03
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Creation of Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant
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On November 22, 2016, Retail Properties of America, Inc. (the Company) entered into a term loan agreement (the Term Loan
Agreement) with Capital One, National Association, as administrative agent, Capital One, National Association, PNC Capital Markets LLC, TD Bank, N.A., and Regions Bank, as joint lead arrangers and joint book managers, TD Bank, N.A., as
syndication agent, PNC Capital Markets LLC and Regions Bank, as co-documentation agent and the initial lenders named therein. The Term Loan Agreement provides for a senior unsecured term loan facility (the Term Loan Facility) in the
maximum aggregate principal amount of up to $200,000,000 that matures on November 22, 2023. The Company has the ability to increase the available borrowings under the Term Loan Facility by up to $100,000,000, for a total aggregate potential
Term Loan Facility size of $300,000,000.
Borrowings under the Term Loan Facility bear interest at a rate per annum equal to London
Interbank Offered Rate (LIBOR) or the alternate base rate plus a margin of between 1.70% and 2.55%, based on the Companys leverage ratio as calculated under the Term Loan Agreement, or 1.50% and 2.45%, based on the Companys investment
grade credit rating. The Company may irrevocably elect to convert to the investment grade credit rating pricing grid at any time, as long as it maintains an investment grade credit rating. Interest on amounts outstanding under the Term Loan Facility
is payable monthly. The Term Loan Facility has a 180-day delayed draw period, which terminates on May 22, 2017. Upon closing, the Company had not yet drawn any amount on the Term Loan Facility. The Company may prepay outstanding principal
amounts under the Term Loan Facility prior to November 22, 2018, subject to (i) any LIBOR breakage costs, and (ii) payment of a prepayment fee equal to 2.0% of the aggregate principal amount prepaid on or before May 22, 2017,
1.5% of the aggregate principal amount prepaid after May 22, 2017 but on or before November 22, 2017, and 1.0% of the aggregate principal amount prepaid after November 22, 2017 but on or prior to November 22, 2018. Subsequent to
November 22, 2018 outstanding principal amounts under the Term Loan Facility are prepayable without penalty or premium, except for LIBOR breakage costs. Any unpaid principal amounts are due and payable upon maturity of the Term Loan Facility.
The Term Loan Agreement also contains customary representations, warranties and covenants, including financial covenants that require the
Company to maintain a maximum leverage ratio, a minimum fixed charge coverage ratio, a maximum unencumbered leverage ratio, a minimum unencumbered interest coverage ratio and a maximum secured indebtedness ratio, and events of default. In the case
of an event of default, the lenders may, among other remedies, accelerate the payment of all obligations.
The Company expects to use the
net proceeds of the Term Loan Facility for (i) acquisition, development and redevelopment projects and related tenant improvements, capital expenditures and leasing commissions, (ii) bridge debt financing for acquisitions, (iii) repayment
of existing indebtedness and (iv) working capital purposes.
Certain of the lenders and their affiliates have provided, and they and
other lenders and their affiliates may in the future provide, various investment banking, commercial banking, fiduciary and advisory services for the Company and its subsidiaries from time to time for which they have received, and may in the future
receive, customary fees and expenses.
The above summary of the Term Loan Agreement does not purport to be complete and is qualified in
its entirety by reference to the full text of the Term Loan Agreement. A copy of the Term Loan Agreement is attached as Exhibit 10.1 to this Current Report on Form 8-K, and is incorporated herein by reference.