Ares REIT Enters $475 Million Secured Loan Agreement
Ares Real Estate Income Trust, a non-traded perpetual life real estate investment trust formerly known as Black Creek Diversified Property Fund, secured a $475 million loan from JPMorgan Chase, Morgan Stanley, and Natixis Real Estate Capital.
The credit facility bears a floating interest rate based on the sum of the secured overnight financing rate for a one-month period and a spread at a blended rate of approximately 2.2%, requires interest-only monthly payments for the term of the loan and has a contractual maturity of October 9, 2026 which may be extended for three successive terms of one year each upon satisfaction of certain terms and conditions in each case as detailed in the loan agreement.
In addition to the loan, Ares REIT entered into an interest rate cap agreement with a term secured overnight financing rate equal to approximately 4.4% to protect against rising interest rates. This agreement is collateralized by the loan and will continue through the maturity date of the loan, which may be extended.
The loan is secured by mortgages, leases, and other assets related to a portfolio of properties located in various locations across the United States.
The loan agreement includes standard provisions for events of default, such as missed payments or breaches of covenants. The lender has the right to act if Ares REIT defaults on the loan, including foreclosure. The agreement also includes covenants related to financial performance, leasing, environmental matters, cash management, property maintenance, insurance, and debt restrictions.
The loan agreement allows the lender to sell or transfer the loan, sell participation interests in the loan, or securitize the loan. Ares REIT is required to cooperate with the lender in these transactions, including providing financial information and reviewing offering documentation.
Launched in January 2006, Ares Real Estate Income Trust owns 108 properties across the residential, industrial, retail, and office sectors, which were 94.5% leased, as of Aug. 31, 2024. The properties total approximately 21.2 million square feet located in 33 markets throughout the United States. The REIT’s net asset value was $7.47 per share at the end of August, and its total asset value was approximately $5.8 billion.
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