Nov. 19 at 11:55 PM
$FSP secures its ~
$249 million debt (term loans + Series A/B senior notes) with pledges of equity interests in "certain subsidiaries" that own properties.
This language technically permits exclusions, but in practice the distinction is largely meaningless because the debt covenants exert control on a fully consolidated basis and contain mechanisms that can force sales of any asset—pledged or unpledged.
A value drop or NOI decline in an unpledged property hurts the ratios just as much as one in a pledged subsidiary. Breaches are therefore triggered by the entire portfolio, not just the collateral pool.
Proceeds from any asset sale (pledged or unpledged) must be used to prepay debt. This “asset-sale sweep” ensures lenders benefit first, turning voluntary or forced dispositions into deleveraging events company-wide. Under financial stress the consolidated covenants, cross-defaults, sweeps, and acceleration rights give lenders effective control over the entire portfolio.
