Invitation Homes Refinances Debt from Life Insurance Company
Invitation Homes Inc. (NYSE: INVH) (“Invitation Homes” or the “Company”) today announced that on June 7, 2019 the Company completed a twelve-year secured term loan with U.K.-based life insurance company Rothesay Life Plc. The loan was originated by Rothesay Life Group company Rothesay Asset Management US LLC, and the principal balance of the loan is $403 million. Total cost of funds for the loan is fixed at 3.59% for the first eleven years, and then floats at LIBOR + 147 bps in the twelfth year, subject to certain adjustments outlined in the Loan Agreement.
“Invitation Homes has a history of innovation, and we are excited to have partnered with Rothesay Life to pioneer a new financing channel for the single-family rental sector,” said Ernie Freedman, Invitation Homes’ chief financial officer. “We are pleased that more and more capital providers continue to recognize the uniquely attractive nature of our industry as it evolves. In addition, this financing extends the maturity profile of Invitation Homes’ balance sheet at a favorable cost of funds as we continue to progress toward our goal of achieving a corporate investment grade rating.”
Structural features of the loan provide for more flexibility than in most of the Company’s other financings to date. Invitation Homes has the right to substitute properties representing up to 20% of the collateral pool annually, and up to 100% of the collateral pool over the life of the loan, subject to certain requirements and limitations outlined in the loan agreement. In addition, four times after the first anniversary of the closing of the loan, and subject to certain requirements and limitations outlined in the loan agreement, Invitation Homes has the right to execute a special release of collateral representing up to 15% of the then-outstanding principal balance of the loan in order to bring the loan-to-value ratio back in line with the loan-to-value ratio as of the closing date.
Invitation Homes used the proceeds from the loan and cash on hand to repay $418 million of outstanding secured debt, including the entirety of its outstanding 2021 maturities, and to fund certain reserves and pay transaction fees and expenses incurred with respect to the loan. The Company now has no debt maturing prior to 2022, with the exception of $230 million of convertible notes maturing in 2019 for which it has announced its intent to settle in common shares. In addition, the refinancing transaction is expected to result in annualized cash interest savings of approximately $3.6 million.
