Associated Estates Nails Down $132M Refi

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RICHMOND HEIGHTS, OH-Associated Estates Realty Corp. has completed the refinancing of $132.2 million in loans on five properties in Florida and Maryland and repaid debt on three properties in Florida and Ohio. As a result, it has reduced annual interest costs by approximately $1.1 million.

The interest rate on the new loans is fixed at 6.09% for seven-year terms, compared to average interest rates of approximately 7.5% on the either defeased or prepaid aggregate of the previous eight loans. In an August presentation to Wall Street analysts, Jeffrey Friedman, president and CEO, identified continued strengthening of the balance sheet by restructuring and reducing debt among the this suburban Cleveland-based multifamily REIT’s 2006 objectives.

Proceeds of the refinancing were used were used for three purposes. They allowed for the defeasance of existing mortgages on five properties in Florida and Maryland with an aggregate principal balance of $67.6 million. They also allowed the company to prepay, in full, $54.6 million of debt on three other properties located in Florida and Ohio. The remaining approximately $10 million in proceeds funded the costs associated with defeasance and for other general corporate purposes.

Neither the lender nor the properties were identified, and GlobeSt.com was unable to reach Associated Estates by deadline. In a statement, Lou Fatica, VP, CFO and treasurer, calls this “an important step in our plan to reduce the overall cost of our debt and improve our operating cash flow.”

The company owns, directly or indirectly; manages, or is a JV partner in 103 multifamily properties in 10 states with an aggregate of 21,348 units. A migration to higher-growth markets, a reduction of the number of markets and the sale of approximately $75 million in Midwest and non-core assets are also among the goals outlined by Friedman in the August presentation.

Shares of AEC closed at $15.57 a share on the NYSE on Sept. 19, barely changed from the 52-week high of $15.69 a share, which was reached the previous day. This nearly doubles the 52-week low of $8.65 a share, which occurred less than a year ago on Oct. 12, 2005.