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Federal Realty Closes $372M Loan

Federal Realty Investment Trust (NYSE: FRT) closed a new $372 million unsecured term loan facility. Proceeds from the financing were utilized to retire the trust's previous $200 million term loan which was due November 6, 2009 and provide sufficient capital to retire the Trust's 8.75 percent Notes due December 1, 2009. As a result, Federal Realty will have no additional debt maturities until 2011. The new term loan facility, which bears interest at an annual rate of LIBOR (subject to a 1.50 percent floor) plus 300 basis points, will mature in July 2011. The financing was originally marketed as a $200 million loan, but significant demand from high-quality financial institutions for the firm's credit at market leading terms allowed Federal Realty to upsize the loan to its final size of $372 million.

Wachovia Securities, a Wells Fargo Co. and PNC Bank, National Association acted as lead arrangers for the loan. J.P. Morgan Chase Bank N.A., Regions Bank and SunTrust Bank acted as co-documentation agents. Bank of America N.A., Royal Bank of Canada, Chevy Chase Bank, F.S.B., Citicorp North America Inc., Comerica Bank and Raymond James Bank, FSB are all lenders for the transaction.

"Even in this difficult credit environment, we were able to upsize the term loan from $200 million to $372 million because of the strong support we received from our lenders, with seven of our existing lenders increasing their collective term loan exposure from $133 million to $315 million," said Andrew Blocher, senior vice president and CFO of Federal Realty. "As a result of this transaction, and our other capital market activities, we're anticipating adequate capital to retire all of our debt maturing in 2009, with no additional maturities until 2011, and create significant capacity on our $300 million unsecured credit facility."

In April, Federal Realty closed a $24.1 million, 10-year loan secured by Rollingwood Apartments in Silver Spring, Maryland at an effective annual interest rate of 5.72 percent. Federal also obtained a commitment of approximately $139 million for a five-year loan secured by four retail assets located in Northern Virginia that is expected to bear interest at an effective annual rate of 7.72 percent. This secured financing is expected to close during the second quarter of 2009.

Federal Realty also announced its first quarter earnings this week. Federal Realty reported funds from operations of $37.8 million or $0.64 per diluted share, and net income of $10.3 million or earnings per diluted share of $0.17. That was down from 2008, but the results were affected by a provision for litigation of $20.6 million. Excluding the litigation provision, FFO increased 6.5 percent to $0.99 per share in the first quarter compared to $0.93 per share in first quarter 2008. Net income available for common shareholders excluding the litigation provision was $31.0 million and earnings per diluted share was $0.52 for the quarter ended March 31, 2009 versus $29.9 million and $0.51, respectively, for first quarter 2008. Same-center property operating income for the firm increased 1.4 percent over the first quarter of 2008. When redevelopment and expansion properties are excluded from same-center results, property operating income for first quarter 2009 decreased 2.1 percent compared to first quarter 2008. Portfolio occupancy stood at 94.2 percent as of March 31—down 80 basis points from 94.0 percent at the end of 2008 and 190 basis points from 96.1 percent on March 31, 2008.

Other notable deals

Developers Diversified Realty(NYSE: DDR) secured two new debt financings for an aggregate of $125 million. The first is a $40 million, two-year loan with a one-year extension option secured by a shopping center in New Jersey. The second financing is an $85 million, 10-year loan secured by four assets in Puerto Rico…. Hawthorne Retail Partners assumed the property management of the 96,238-square-foot Brookdale Shopping Center in Harrisburg, N.C., and the 28,256-square-foot The Courtyard at Chapel Hill in Chapel Hill, N.C…. Nogales Investors, a Los Angeles-based private equity firm, and Houston-based Breco Holdings completed the purchase of Numero Uno Markets for an undisclosed price. It is the first transaction for the new joint-venture between the two companies. Numero Uno operates eight grocery stores in Los Angeles…. Faris Lee Investments has opened a New York office with the appointment of Richard Berlinghof as principal…. Charles Dunn Co. negotiated the $2.25 million purchase of a Jack in the Box location at 20101 Lake Forest Drive. The property totals 2,816 square feet.Saleh Family Trust sold the property to Kea Lani Investments, which was represented by Faris Lee Investments…. Beacon Realty Capital arranged and closed a $1.58 million loan on South Town Mall in Ottawa, Ill.

(To have your deals included in our weekly roundup, please email releases to David Bodamer or Elaine Misonzhnik.)

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