$118M Facility Targets Maturing Debt

Phillips Edison CFO Raymond D. Martz tells GlobeSt.com that the goal of the facility was to stay ahead of the company's debt maturity. Given the uncertainty of the markets, he explains, refinancing of any type of debt is critical, especially when it comes to the real estate sector.

"A number of our peers are having significant challenges on their balance sheet because of near-term maturity," Martz adds. "We were able to address our maturity earlier and fortunately get it moved back. We're very excited about this facility."

Meanwhile, the local company's balance sheet is strong on the liquidity side and has a good coverage ratio, he points out. "Now we can really sit back and make our strategic investment decisions on our time, versus a bank's time," he comments.

The facility was arranged through Banc of America Securities and carries a three-year term with two one-year extension options. Martz didn't provide specific details about the facility's interest rate, but did say it's under the 6%-8% range of similar financing.

"We talked to a number of lenders about the financing. We have good relations with Bank of America, Wells Fargo, JP Morgan and other domestic and international banks," Martz says. "The deal Bank of America gave us offered the most flexibility and the pricing was competitive."

Martz says though the Phillips Edison balance sheet is in good shape, the company will be fairly active on the refinancing side during the next six to 12 months. The company has repositioned and turned around properties in western states, which will require some new financing. There are other developments that will require some funds as well. In addition, Martz says senior management at Phillips Edison is examining the possibility of taking care of debt maturity beyond 2010.

Though financial institutions these days are cautious with their lending, Martz says there should be few problems in obtaining the necessary financing because Phillips Edison assets are producing strong cash flow.

"There's been a lot of talk about banks getting all of the TARP money and still not lending. And yes, some of the banks are struggling," he remarks. "But the reality is, if you have a good asset, that's producing well and with very healthy cash flow, you can get a deal done."