Developers Diversified Secures $500M in New Credit
- Mar 27, 2008
Flying in the face of a tight new credit environment, Cleveland-based Developers Diversified Realty has in recent weeks secured a little more than $500 million in new loans and lender commitments. The total comes from various sources, including insurance companies and commercial banks.“It isn’t news that a number of financing avenues have shut down, but other options are still available at decent rates for borrowers with strong credit profiles,” a spokesperson for DDR told CPN this morning. DDR is taking advantage of its own strong credit profile, the spokesperson added, to take care of short-term debt that’s maturing this year, among other purposes. The largest part of the financing is $350 million of net proceeds from a new portfolio of mortgages with a fixed interest rate of 5 percent interest-only debt service payments, and a five-year maturity. The financing was provided by a life insurance company. The company also closed a $71 million construction loan on its Homestead, Fla., development project. The interest-only loan, which was provided by three banks, has an interest rate of LIBOR plus 120 basis points and has a three-year term, plus two one-year extension options. Also, DDR recently extended a $72 million term bank loan secured by the two assets held in its RVIP VII joint venture, of which the company’s ownership is 21 percent. The loan has an interest rate of LIBOR plus 125 basis points and has a two-year term, plus a one-year extension option. The company also has a signed term sheet for a $50 million construction loan on smaller developments at an interest rate of LIBOR plus 110 basis points. That loan is expected to close early in the second quarter.