8-KMaterial AgreementsFinancial EventsExhibits & Filings

AVALONBAY COMMUNITIES INC 8-K Report, Material Agreement (May 19, 2008)

Filed May 19, 2008For Securities:AVB

Summary

AvalonBay Communities, Inc. (AVB) has announced the closing of a $330 million variable rate unsecured term loan, with the option to increase the aggregate size to $400 million. This financing, entered into on May 15, 2008, is structured into three tranches with distinct maturity dates in 2009, 2010, and 2011, providing the company with flexible, albeit short to medium-term, capital. The loan bears interest based on LIBOR plus a spread that adjusts depending on AVB's credit rating, currently set at LIBOR plus 1.25%. This structure allows for potential cost savings if the company's credit profile improves. The agreement includes customary covenants for a loan of this nature, such as maintaining specific leverage ratios, fixed charges coverage, and unencumbered asset levels, which are standard for managing financial risk and ensuring borrower stability.

Key Highlights

  • 1AVB secured a $330 million unsecured term loan, expandable to $400 million.
  • 2The loan is variable rate, tied to LIBOR plus a spread.
  • 3Interest spread is currently LIBOR + 1.25%, with a range from LIBOR + 1.15% to LIBOR + 1.975% based on credit rating.
  • 4The loan is structured into three tranches with staggered maturity dates: May 2009, January 2010, and January 2011.
  • 5The financing is unsecured, meaning it does not require specific company assets as collateral.
  • 6The company is subject to customary financial covenants, including leverage and coverage ratios.

Frequently Asked Questions

AvalonBay Communities, Inc. has entered into a $330 million variable rate unsecured term loan. The company also has the option to request an additional $70 million, which would bring the aggregate size of the loan facility to $400 million.

The term loan carries a variable interest rate tied to the London Interbank Offered Rate (LIBOR). The current stated pricing is LIBOR plus 1.25% per annum. This spread can fluctuate between LIBOR plus 1.15% and LIBOR plus 1.975%, depending on the credit rating assigned to AvalonBay's unsecured and unsubordinated long-term indebtedness.

The term loan is divided into three tranches with different maturity dates. Tranche A matures on May 1, 2009, Tranche B matures on January 4, 2010, and Tranche C matures on January 3, 2011. The company cannot extend the term of any tranche.

Yes, AvalonBay is subject to certain customary covenants as part of the term loan. These include maintaining specific financial metrics such as maximum leverage ratios, a minimum fixed charges coverage ratio, a maximum secured indebtedness ratio, and a minimum unencumbered assets level.