Summary
AvalonBay Communities, Inc. (AVB) announced on March 11, 2008, that it has entered into two interest rate lock agreements for new mortgage loans totaling approximately $265 million. These five-year, interest-only loans are expected to close in March or April 2008 and will be secured by two of the company's communities: Avalon at Arlington Square in Arlington, Virginia, and Avalon at Cameron Court in Alexandria, Virginia. The aggregate loan amount will carry a fixed weighted average interest rate of 4.78% per annum for the initial five-year term. Notably, the loan for Avalon at Arlington Square includes an option for a one-year extension period where interest would be variable (1-month LIBOR plus a 2.50% spread), during which the loan can be prepaid without penalty. The company intends to use the proceeds from these financings to pay down its unsecured credit facility and to fund its development and redevelopment projects.
Key Highlights
- 1AVB has secured interest rate locks for two new mortgage loans totaling approximately $265 million.
- 2The loans are expected to close in March or April 2008.
- 3The loans will be five-year, interest-only mortgages.
- 4The aggregate fixed interest rate for the initial five-year term is 4.78% per annum.
- 5The loans are secured by the Avalon at Arlington Square and Avalon at Cameron Court communities.
- 6Proceeds will be used to pay down the unsecured credit facility and support development/redevelopment activities.
- 7The Avalon at Arlington Square loan has a one-year extension option with a variable rate and penalty-free prepayment.