The funding is secured by the REIT's property at 3 Beaver Valley Rd. in Wilmington, DE and will refinance two existing loans on the property, including American Financial's last significant floating rate debt exposure. The new financing is expected to close during the week of June 10, when the current debt becomes payable without penalty.
The interest rate has been locked in on a forward basis. The new loan matures in June 2014 and amortizes over the term to a $35-million principal amount at maturity. Following the refinancing, American Financial will have less than $8 million in floating rate debt exposure, which represents less than 1% of its total outstanding debt.
This financing incrementally adds to the portion of American Financial's long-term debt that carries a fixed rate of interest. According to a statement, more than 99% of the REIT's $1.5 billion of debt is fixed and has a weighted average maturity of 13 years and a coupon which approximates 5.57%.
Nicholas S. Schorsch, president and CEO of American Financial, says, "We believe that the fixed interest rate of just over 5% is very attractive, given the current debt market environment. This new financing reflects our continuing efforts to maximize shareholder value and reduce interest rate risk through efficient use of long-term, fixed-rate leverage."
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