The operating partnership of Griffin Capital Essential Asset REIT Inc. (the “GCEAR”) entered into a loan agreement with Bank of America, N.A., UBS AG and KeyBank National Association for a total loan amount of $375 million. The company used the net proceeds to pay down a portion of its credit facility led by KeyBank National Association.
“By using the proceeds of the financing to pay down our revolving line of credit, we created additional capacity to meet our future capital requirements,” said Michael Escalante, president of the REIT and chief investment officer of Griffin Capital.”
He added, “This strategic move also allows us to extend maturities on our debt to more closely align with the REIT’s average lease duration while taking advantage of today’s historically low interest rate environment. We are also very pleased to have executed a rate lock before the recent run-up in the long bond – thereby saving GCEAR over $1 million in annual interest expense.”
The full-term, interest-only loan has a duration of 10 years and matures on October 1, 2027 with a fixed rate of 3.77 percent.
The refinancing will increase GCEAR’s fixed rate debt to more than 96 percent of the outstanding debt balance, as compared to 77 percent as of June 30, 2017.
The loan is secured by cross-collateralized and cross-defaulted first mortgage liens on 10 properties owned by the GCEAR operating partnership, including brand-name tenants such as ACE Hardware Corporation, General Electric Company, State Farm Mutual Automobile Insurance Co., T-Mobile West LLC, and Wells Fargo Bank.
Griffin Capital Essential Asset REIT, which went effective in November 2009, oversees a $3.4 billion portfolio of 74 office and industrial properties totaling 18.8 million rentable square feet. The REIT closed in April 2014 and has raised approximately $1.5 billion in investor equity since inception, according to Summit Investment Research.