Griffin Capital Essential Asset REIT Refinances $294 Million Portion of Credit Facility
October 5, 2017 | James Sprow | Blue Vault
Griffin Capital Essential Asset REIT utilized ten special purpose entities that own ten properties owned by the operating partnership of the REIT, entering into a loan agreement with Bank of America secured by properties with an aggregate loan of $375 million. The loan bears interest at 3.77% and requires monthly payments of interest only, maturing in 10 years. The proceeds were used in part to pay down a portion of a credit facility with KeyBank and other lenders which bears an interest rate of LIBOR + 1.45% with a maturity of July, 2020. The effective interest rate on the credit facility was 2.97% as of June 30, 2017.
The loan is secured by cross-collateralized and cross-defaulted first mortgage liens on properties, but the borrowers have the right to substitute secured properties with replacement properties, subject to certain conditions in the loan agreement. In addition, the loan may be assumed with the consent of the lender in connection with the sale of the borrower’s interest or the conveyance of the underlying ownership interest.
By replacing the variable rate credit facility borrowings with longer-term fixed-rate debt, the REIT has protected itself from rises in interest rates while maintaining flexibility in its portfolio of those investments that represent collateral for the loan.
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The time (at Blue Vault's 2nd Annual Broker Dealer Educational Summit) proved extremely informative.