The three-year, interest-only loan replaces a fixed-rate mortgage from Prudential Life that carried a 7.22% fixed rate. The loan, which had nearly eight years before it came due, had a $65.6-million balance refinanced by SunAmerica Life Insurance Co. While the initial interest rate is about 2.4 percentage points lower, the new debt could carry a rate up to 8.25%. The REIT bought an interest rate protection agreement capping Libor at 6.5%.
Occupancy at Continental Towers dipped during the first quarter to 74.6%, according to Prime Group Realty Trust's just-released earnings report. Available space is being marketed by the company at $14.50 per sf on a net basis.
The new mortgage can be extended for an additional two years at current market rates, as well as convert it to a seven-year, fixed-rate loan.
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