EastGroup Properties Inc. filed SEC Form 8-K: Entry into a Material Definitive Agreement, Termination of a Material Definitive Agreement, Creation of a Direct Financial Obligation, Other Events, Financial Statements and Exhibits
$EGP
Real Estate Investment Trusts
Real Estate
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________________________
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (date of earliest event reported): June 13, 2024
(Exact Name of Registrant as Specified in its Charter)
| (State or Other Jurisdiction of Incorporation) | (Commission File Number) | (IRS Employer Identification No.) | |||||||||||||||
(Address of Principal Executive Offices, including zip code)
(601 ) 354-3555
(Registrant’s telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |||||
| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |||||
| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |||||
| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) | |||||
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading symbol(s) | Name of each exchange on which registered | ||||||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
| Emerging growth company | |||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
1 of 4 Pages
Item 1.01 Entry into a Material Definitive Agreement.
On June 13, 2024 , EastGroup Properties, Inc. (the “Company”) and its subsidiary, EastGroup Properties, L.P., entered into the Sixth Amended and Restated Credit Agreement (the “Credit Agreement”) with the lender parties thereto, and PNC Bank, National Association, as Agent, Regions Bank, as Syndication Agent, Bank of America, N.A., U.S. Bank National Association, TD Bank, N.A., and JPMorgan Chase Bank, N.A., as Co-Documentation Agents, PNC Capital Markets LLC, as Sustainability Agent, PNC Capital Markets LLC, Regions Capital Markets, and BofA Securities, Inc., as Joint Lead Arrangers, and PNC Capital Markets LLC and Regions Capital Markets, as Joint Bookrunners. The Credit Agreement replaced the agreement providing for the Company’s existing $625 million unsecured revolving credit facility (the “Existing Credit Agreement”), dated as of June 29, 2021, as amended January 10, 2023. The Credit Agreement allows for borrowings in the aggregate principal amount of up to $625 million. Borrowings will bear interest, at the Company’s option, at the Base Rate Option (as defined in the Credit Agreement) plus a margin of 0.00% to 0.40% or at the secured overnight financing rate (“SOFR”) plus a margin of 0.725% to 1.40%, in each case depending on the Company’s credit ratings. The initial interest rate is SOFR plus 0.765% which is the equivalent of 6.10% at June 13, 2024 . The facility fee pursuant to the Credit Agreement ranges between 0.125% to 0.30% per annum and is currently set at 0.15%, also based upon the Company’s credit ratings. The Credit Agreement includes a $625 million accordion feature and has an initial maturity date of July 31, 2028 with two six-month extensions at the Company’s option.
The Credit Agreement contains various customary covenants, including covenants that require the Company to maintain (i) its ratio of total liabilities to total asset value at 60% or less, subject to certain exceptions, (ii) its secured debt to total asset value at 30% or less, (iii) a fixed charge coverage ratio of at least 1.50:1.00 and (iv) a ratio of unencumbered net operating income to total unsecured interest expense of at least 1.75:1.00. In addition, the Company may not pay dividends or make distributions with respect to its equity in excess of 90% of the Company’s Funds From Operations, as defined in the Credit Agreement, except to the extent necessary to enable the Company to continue to qualify as a real estate investment trust for Federal income tax purposes. These covenants and restrictions also limit the Company’s ability to incur additional indebtedness, merge, consolidate or sell all or substantially all of its assets and enter into transactions with affiliates.
The Credit Agreement also includes a sustainability-linked pricing component pursuant to which, if the Company meets certain sustainability performance targets, the applicable interest margin will be adjusted pursuant to the terms of the Credit Agreement.
The Credit Agreement also includes customary events of default, including failure to pay principal, interest or fees when due, failure to comply with covenants, if any representations or warranty made by the Company is false or misleading in any material respect, default under certain other indebtedness, certain insolvency or receivership events affecting the Company and its subsidiaries, the occurrence of certain material judgments, or a change in control of the Company. The amounts outstanding under the Credit Agreement may be accelerated upon certain events of default.
Some of the lenders party to the Credit Agreement or their affiliates have from time to time provided in the past, and may provide in the future, commercial lending or investment banking services to the Company and its affiliates in the ordinary course of business.
The foregoing summary description of the Credit Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Credit Agreement, which is filed as Exhibit 10.1 hereto and is incorporated herein by reference.
Item 1.02 Termination of a Material Definitive Agreement.
On June 13, 2024 , in connection with the entrance into the Credit Agreement, the Company repaid all of the outstanding obligations under and terminated the Existing Credit Agreement.
2 of 4 Pages
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
The information provided in Item 1.01 on this Form 8-K is incorporated herein by reference.
Item 8.01 Other Events.
On June 13, 2024 , the Company entered into the Fifth Amendment To Letter Agreement for its unsecured working cash credit facility with PNC Bank, National Association (the “Working Cash Line”) extending the expiration date to July 31, 2028 with two six-month extensions. The Working Cash Line was extended under substantially the same terms and conditions as the Credit Agreement.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
| Exhibit No. | Description | ||||||||||
Sixth Amended and Restated Credit Agreement, dated | |||||||||||
| Cover Page Interactive Data File (embedded within the Inline XBRL document). | |||||||||||
3 of 4 Pages
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date: June 13, 2024
| EASTGROUP PROPERTIES, INC. | |||||
| By: /s/ BRENT W. WOOD | |||||
| Brent W. Wood Executive Vice President, Chief Financial Officer and Treasurer | |||||
4 of 4 Pages