First Industrial Gets $110M Loan for CalSTRs JVs, Discontinues European Operations
- Dec 19, 2008
First Industrial Realty Trust Inc. has obtained a new $110 million term loan facility for its joint ventures with the California State Teachers’ Retirement System (CalSTRS), the second-largest public pension fund in the United States. The news came one day after the REIT said it was discontinuing its European operations as part of a cost-cutting measure. The Chicago-based REIT said Thursday that the three-year term loan is priced at LIBOR plus 2.75 percent. The loan could be expanded up to $275 million and allows for a revolving credit line of up to $175 million, for a total potential facility of $450 million. A syndicate of three banks provided the loan: WestLV, acting as administrative agent; PNC Bank and Regions Bank. “The ability to execute this term loan at attractive terms in the current challenging credit environment reflects the quality of our joint venture assets, our sponsorship and our joint venture partner,” Ed Tyler, First Industrial’s interim CEO, said in a company news release. Robert Walter, senior vice president of capital markets for First Industrial, led the company’s team on the transaction. First Industrial has been working with CalSTRS for some time. As reported Sept. 23 by CPN, the REIT extended the terms of five joint ventures with CalSTRS through December 2018. The JVs are: the $1.6 billion Development and Repositioning JV (FirstCal 1); the $1.6 billion Strategic Land and Development JV (FirstCal 3); the $475 million FirstCal Europe JV; the $285 million FirstCal Canada JV; and the 2005 Core JV (FirstCal 2), which was formed for the acquisition of a $1 billion portfolio. First Industrial and CalSTRS had also extended the respective investment periods for the Development and Repositioning JV; the Strategic Land and Development JV; FirstCal Europe; and FirstCal Canada through December 2011. In October, First Industrial said the FirstCal Europe JV had invested in two buildings with a total of 1.3 million square feet that were to be built in a business park in Belgium. An Oct. 8, CPN report noted that construction had started on the first building, a 461,000-square-foot distribution center in Bornem. On Wednesday, First Industrial announced it was discontinuing its European operations as part of an ongoing cost-cutting and realignment program. A First Industrial spokesman told CPN that the company was closing its offices in France, Germany, the Netherlands and Belgium. He said about 20 employees there would be let go. The two buildings in Belgium that it had invested in as part of the CalSTRs JV are the only commitments or assets the REIT had in Europe. “At this time, we have a forward commitment. In terms of what will happen to them in the future is yet to be determined,” the spokesman told CPN. The company also said Wednesday that Mike Havala, its CFO, had resigned and was replaced by Scott Musil, who had been the REIT’s chief accounting officer. The resignation comes almost two months after Michael Brennan stepped down as president & CEO amid turmoil in numerous REITs due to the recession. First Industrial’s stock price, which had traded as high as $37.23 per share, was trading Thursday on the New York Stock Exchange at about $7.75 per share at mid-day.