BEACHWOOD, Ohio, June 29, 2011 /PRNewswire/ -- Developers Diversified Realty Corporation (NYSE: DDR) ("DDR") announced today that it has refinanced its existing $550 million senior secured term loan, scheduled to mature on February 20, 2012, with a new $500 million senior secured term loan arranged by KeyBanc Capital Markets and J.P. Morgan Securities LLC. The new term loan has a 39-month term with an additional 12-month extension option. Pricing on the new term loan is currently set at LIBOR plus 170 basis points and is determined based upon DDR's credit ratings from Moody's and S&P. The term loan bank group consists of 21 institutions, including four new participants.
DDR has entered into an interest rate swap contract to fix LIBOR at 1.01% per annum on $100 million of the new term loan through June 2014.
Simultaneously with refinancing the term loan, DDR amended its two senior unsecured revolving credit facilities that had previously closed in October 2010. The unsecured revolving credit facility, arranged by J.P. Morgan Securities LLC and Wells Fargo Securities, LLC, was amended to extend the term by two additional years to February 28, 2016, to reduce pricing and fees, and to modify certain covenants. Consistent with DDR's previously stated objective to lower its reliance on short-term floating rate debt, the Company elected to reduce the size of the facility from $950 million to $750 million. The amended facility contains an accordion feature that provides for $1.25 billion of total capacity. DDR also amended its $65 million unsecured revolving credit facility, provided solely by PNC Bank, National Association, to match the amended terms of the larger facility.
The pricing grid on both new revolving credit facilities has been reduced, and pricing is currently set at LIBOR plus 165 basis points, which is a decrease of 110 basis points from the previous rate, and is determined based upon DDR's credit ratings from Moody's and S&P. Further, the facility fee has been reduced from 50 basis points to 35 basis points. The covenants on the amended facilities have been adjusted and the capitalization rate used to value assets has been lowered.
David Oakes, DDR's Chief Financial Officer, stated, "We are very pleased to refinance the term loan ahead of schedule, at terms that exceeded our expectations. This refinancing represents a final step in balancing our overall maturity profile while also addressing our largest single maturity in 2012. Moreover, the amendment and extension of our revolving credit facility highlights the continued improvement in the market's perception of our financial stability. We very much appreciate the support of our bank group in closing both of these significant transactions."
Daniel B. Hurwitz, DDR's President and Chief Executive Officer commented, "While opportunistic financing activity will remain a strategic focus, these transactions mark a formal improvement in our long-term cost of capital, while reducing our reliance on short-term bank borrowings and meaningfully accelerating the completion of our recapitalization efforts. The successful execution of these transactions, combined with our ability to generate capital proceeds through asset sales, provides us greater flexibility to pursue strategic growth initiatives without the need to issue additional shares of common stock."
DDR owns and manages approximately 520 retail properties in 41 states, Puerto Rico and Brazil totaling approximately 127 million square feet. The Company's prime portfolio primarily features open-air, value-oriented shopping centers in high barrier-to-entry markets with stable populations and high growth potential. DDR is the largest landlord in Puerto Rico and owns a premier portfolio of regional malls primarily clustered around Sao Paulo, Brazil. DDR is a self-administered and self-managed REIT operating as a fully integrated real estate company. Additional information about DDR is available on the Company's website at www.ddr.com.
SOURCE Developers Diversified Realty Corporation