Archstone Smith Issues Debt

The net proceeds will be used to repay a portion of the borrowings under its unsecured revolving credit facilities, according to SEC documents. "We currently have $800 million in total borrowing capacity under these unsecured credit facilities, with approximately $501 million outstanding and an available balance of approximately $299 million at June 5," according to the prospectus filed with the SEC.

Amounts repaid under the unsecured credit facilities may be reborrowed and Archstone-Smith expects to make additional borrowings under the unsecured credit facility following this offering for the development and acquisition of apartment communities and for working capital purposes.

"Our $700 million unsecured credit facility, which is led by JP Morgan Chase Bank, an affiliate of one of the underwriters, bears interest at the greater of prime or the federal funds rate plus 0.50% or, at our option, LIBOR plus 0.65%, which is currently 1.99%," according to the documents.

The spread over LIBOR can vary from 0.50% to 1.25% based upon the rating of long-term unsecured senior notes. Under a competitive bid option, the trust may be able to borrow up to $350 million at a lower interest rate spread over LIBOR depending on market conditions.

The credit facility is scheduled to mature in December and may be extended for one year. Its $100 million short-term credit facility is with JP Morgan Chase Bank and bears interest at the rate agreed among the parties at the time of a borrowing, which is currently a weighted average of 1.9%.