Real Estate Forum - February 2008

the existing debt in place and we were cash buyers for the balance,” he says.

With a 95% occupancy, the complex consists of a four-level shopping center,

Shops at North Bridge two parking garages and

133,615 sf of office space. Nordstrom anchors the center, which features approxi-

mately 50 specialty retailers and 20 restaurants. On site, but not part of the deal, are five hotels, including the InterContinental Chicago Hotel.

Both Steffen and Burns note that the transaction closed rather smoothly. “It is always complicated when you have that many tenants in a major property like this one, but it was nothing that we couldn’t work through,” says Burns.

This acquisition marks the second buy for the pair. Back in 2005, they bought Tyson’s Corner Center, a 1.8-million-sf mall in Fairfax County, VA, for an estimated $399 million,

according to Real Capital Analytics. Having successfully worked with Macerich on that deal, Burns says, “We approached them about the Shops as to whether they would like a similar partnership. It worked out right from there.”

Beyond a few minor changes, such as the signage, the JV has no immediate plans for repositioning or renovating the property, says Steffen. The partnership, meanwhile, is not looking at any other assets at this time as they are “in a digestion process,” according to Burns.—Danielle Douglas

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finance
BEHRINGER HARVARD CLOSES
ON $500M CREDIT FACILITY

New York City—Behringer Harvard REIT I Inc. has closed on a $500-million secured-credit facility. The agreement allows the firm to take out up to $200 million in a term loan and as much as $300 million under a revolving credit facility.

KeyBanc Capital Markets and Wachovia Securities were co-lead arrangers on the facility, which can potentially be upped to $600 million. KeyBank National Association served as administrative agent.

This represents the first corporate-level debt raise for Behringer Harvard, relates Kevin Murray, senior vice president of KeyBank Real Estate Capital. In the past, the firm used project-specific loans, mostly CMBS debt, but decided to go with this line of credit since most of the company’s assets already have CMBS debt on them. “It was not an option on this deal,” the Dallas-based executive adds. “Many of their assets were simply under-levered by CMBS debt, so the facility provided them with a way to tap into the value of their assets without having to repay the existing on the individual properties,” the executive explains. “CMBS debt traditionally includes lock-outs and large pre-payment penalties, so it is not always feasible to prepay and re-leverage each asset with new CMBS debt.”

With this credit facility and loan, Behringer Harvard has the option to prepay the loans at any time without penalty.

Both the term loan and the credit facility have three-year terms and one-year extension options. The facility matures on Dec. 11, 2010. Behringer Harvard has the option to borrow at either Libor or a base rate that is the greater of either the prime rate or 0.5% above the Federal Funds Effective Rate. “Most borrowers tend to utilize the Libor option since it is traditionally less expensive,” notes Murray.