PREIT Advances Capital Plan with New $670M Credit
- Mar 17, 2010
March 17, 2010
By: Barbra Murray, Contributing Editor
In the current lending climate, it’s a rare occasion that a REIT can obtain over half a billion dollars in financing, but Pennsylvania Real Estate Investment Trust has done just that. The Philadelphia-based retail REIT recently got its hands on a $670 million secured credit facility. But, according to PREIT, the coup had nothing to do with the slow thawing of the credit markets.
PREIT’s credit facility, courtesy of a group of banks led by Wells Fargo Bank N.A., consists of $520 million of term loans and a $150 million revolving line of credit, secured by mortgages on 22 of the company’s shopping malls and a second lien on a single property. PREIT’s new credit facility is in accord with the company’s previously announced capital plan, part of which calls for the refinancing of debt. To that end, the new credit facility will be used to pay down the company’s $500 million unsecured revolving facility obtained in 2003 and $170 million unsecured term loan from 2008, both of which were provided by the Wells Fargo-led bank team and scheduled to mature on March 20, 2010.
“This transaction is fairly unique among recent real estate company transactions because the total amount of credit going forward has not changed,” Edward A. Glickman, PREIT President and COO, told CPE. The only difference is the term loan is larger and the revolving line of credit is smaller. “We didn’t need as much revolving credit as we did in the past because we are now in the position of having these properties more or less completed,” he said. “You could say we’re finished remodeling the house.”
For PREIT, securing such a large amount of financing was all about history, not the leisurely defrosting of the credit markets or the premier quality of its retail portfolio. “We’ve had a long relationship with the banks involved in the transaction; that’s the fundamental piece of it,” Glickman said. “And we’ve always performed under our loan agreements.”
Presently, PREIT’s retail portfolio encompasses 38 shopping malls and 13 strip/power centers accounting for an aggregate 34 million square feet, as well as three properties in the development stage. The assets span 13 states in the eastern half of the U.S.