Developers Diversified refinances term loan, amends revolvers

By Toni Weeks

San Diego, June 29 - Developers Diversified Realty Corp. said it has refinanced its existing $550 million senior secured term loan due Feb. 20, 2012 with a new $500 million senior secured term loan arranged by KeyBanc Capital Markets and J.P. Morgan Securities LLC. The bank group for the new loan consists of 21 institutions, including four new participants.

Pricing on the new loan, which has a 39-month term with a 12-month extension option, is currently set at Libor plus 170 basis points. The interest rate will be based upon the company's credit ratings from Moody's and S&P. The company entered into an interest rate swap contract to fix Libor at 1.01% per year on $100 million of the new loan through June 2014.

Simultaneously with the refinancing, Developers Diversified arranged with J.P. Morgan Securities LLC and Wells Fargo Securities, LLC to amend its two senior unsecured revolving credit facilities, which closed in October 2010, to extend the term by two years to Feb. 28, 2016, reduce pricing and fees and modify some of the covenants.

Because of the company's objective to lower its reliance on short-term floating-rate debt, it reduced the size of the facility to $750 million from $950 million. The amended facility contains an accordion feature that provides for $1.25 billion of total capacity.

The company also amended its $65 million unsecured revolving credit facility provided by PNC Bank, NA to match the amended terms of the larger facility.

Pricing on both of the revolvers is set at Libor plus 165 bps, a decrease of 110 bps from the previous rate. As with the new term loan, the rate for the revolvers will depend upon the company's credit ratings from Moody's and S&P. The facility fee was reduced to 35 bps from 50 bps. Covenants on the amended facilities have been adjusted, and the capitalization rate used to value assets has been lowered.

Developers Diversified is a self-administered and self-managed real estate investment trust operating as a fully integrated real estate company and is based in Beachwood, Ohio.

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