Item 1.01. Entry into a Material Definitive Agreement.
On June 15, 2023 (the “Closing Date”), NETSTREIT, L.P. (the “Borrower”) and NETSTREIT Corp. (the “Company”) entered into that certain Amended and Restated Credit Agreement (the “Amended Credit Agreement”), by and among the Borrower, the Company, the several institutions party thereto, as lenders, and Wells Fargo Bank, National Association (“Wells Fargo”), as Administrative Agent. The Amended Credit Agreement amends and restates in its entirety that certain Credit Agreement, dated as of December 23, 2019 (the “Existing Credit Agreement”), by and among the Borrower, the Company, the financial institutions party thereto, as lenders, and Wells Fargo, as Administrative Agent.
The Amended Credit Agreement provides for a $175.0 million senior unsecured term loan (the “Term Loan”) maturing on January 15, 2026, which such date may be extended by one year at the election of the Borrower (subject to certain conditions). The Term Loan is repayable at the Borrower’s option in whole or in part without premium or penalty
Pursuant to the Amended Credit Agreement, the Company and certain material subsidiaries of the Borrower entered into a guarantee agreement providing for the guarantee of the obligations under the Amended Credit Agreement and certain hedging and cash management obligations of the Company and its subsidiaries.
The proceeds of the Term Loan were used on the Closing Date to repay in full the Borrower’s obligations under the Existing Credit Agreement.
The interest rate applicable to the Term Loan is determined by the Company’s Investment Grade Rating (as defined in the Amended Credit Agreement) status. Prior to the date the Company obtains an Investment Grade Rating, interest shall accrue at either (i) SOFR, plus a margin ranging from 1.15% to 1.60% or (ii) Base Rate, plus a margin ranging from 0.15% to 0.60%, in each case based on the Company’s consolidated total leverage ratio. After the date the Company obtains an Investment Grade Rating, interest shall accrue at either (i) SOFR, plus a margin ranging from 0.80% to 1.60% or (ii) Base Rate, plus a margin ranging from 0.00% to 0.60%, in each case based on the Company’s Investment Grade Rating. Interest is payable monthly or at the end of the applicable interest period in arrears.
The Amended Credit Agreement contains customary representations and warranties, which include customary materiality, material adverse effect and knowledge qualifiers. The Amended Credit Agreement contains customary affirmative and negative covenants including, among other requirements, negative covenants that restrict the Company’s and its subsidiaries’ ability to create liens, and that restrict its subsidiaries’ ability to incur certain indebtedness. Further, the Amended Credit Agreement contains a number of financial covenants including, among others, the maintenance of a maximum leverage ratio, a fixed charge coverage ratio, a secured leverage ratio and a minimum tangible net worth.
The Amended Credit Agreement contains events of default that include, among others, non-payment of principal, interest or fees, breach of covenants, inaccuracy of representations and warranties, cross defaults to certain other indebtedness, bankruptcy and insolvency events with respect to the Company and certain of its subsidiaries, material judgments, and events constituting a change of control. Upon the occurrence and during the continuance of an event of default, the lenders may accelerate the obligations under the Credit Agreement; however, that acceleration will be automatic in the case of bankruptcy and insolvency events of default involving the Company.
The foregoing description of the Amended Credit Agreement is not complete and is qualified in its entirety by reference to the Amended Credit Agreement filed herewith as Exhibit 10.1 to this Current Report on Form 8-K, and such exhibit is incorporated herein by reference.