Associated Estates Realty gets $125 million five-year term loan

By Angela McDaniels

Tacoma, Wash., June 8 - Associated Estates Realty Corp. entered into a $125 million senior term loan due June 2, 2016 on Friday, according to an 8-K filing with the Securities and Exchange Commission.

The initial interest rate is Libor plus 180 basis points. The margin can range from 180 bps to 255 bps, depending on the company's leverage ratio.

The company may prepay the term loan in whole or in part at any time after the first year without penalty. Amounts repaid during the first year will be subject to a fee of 50 bps. Amounts repaid may not be reborrowed.

PNC Bank, NA is the administrative agent. PNC Capital Markets LLC acted as lead arranger, Wells Fargo Bank, NA as syndication agent and U.S. Bank, NA as documentation agent. The other participating banks are Raymond James Bank, FSB, RBS Citizens, NA and Citibank, NA.

Under the financial covenants, the company's ratio of consolidated outstanding debt to total asset value is capped at 0.6 to 1.

In connection with the closing of the term loan, the company's $250 million revolving credit facility was amended to reduce the definition of capitalization rate, which is used to determine borrowing eligibility and leverage, to 7.25% from 7.5%.

Proceeds from the term loan were used to pay down borrowings outstanding on the revolver and for general corporate purposes.

Associated Estates is a Richmond Heights, Ohio-based real estate investment trust focused on multifamily residential real estate.

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