Finance
REITs
Aug 04, 2009
By: Barbra Murray, Contributing Editor
The chilly credit market apparently warmed up for Vornado Realty Trust, which just wrapped up the refinancing of its 442,000-square-foot office property just outside of Washington, D.C., in Arlington, Va., courtesy of an $82.5 million loan.
Carrying the address of 2011 Crystal Dr., the newly refinanced asset sits between Reagan National Airport and the Pentagon in Arlington's Crystal City submarket. The 11-story Class A building, developed in 1984, is fully leased to a bevy of tenants including Conservation International, equity research firm Integreon and the American Association for Homecare.
Vornado's loan came with a fixed rate of 7.3 percent and two optional one-year extensions beyond the August 2017 maturity date. According to SEC files, the Paramus, N.J.-based REIT's outstanding balance on the 2011 Crystal mortgage, which was scheduled to mature in October of this year, was approximately $38.2 million at an interest rate of 6.88 percent as of the close of the first quarter of 2009.
Clearly, the loan allows Vornado to do more than just repay the existing loan on the office property. With $44.5 million to spare, the company is left with quite a bit of pocket change. Plans for the remaining proceeds have not been publicized and Vornado declined to comment on the transaction or the company's plans for the future.
A high-quality building and a jam-packed tenant roster are veritable prerequisites for financing in the presently challenging lending climate, yet those criteria still offer no guarantee with today's tight-fisted and ultra-cautious banks. But location, in some cases, still carries a certain degree of weight. Undeniably, the Greater Washington, D.C., area has not escaped the ravages of the downtrodden economy, but the future for the area holds a certain promise not frequently seen in most other regions. "Although market conditions in Northern Virginia have slowed due to the national recession, this sub-state area is poised for healthy long-term growth given its focus on government contracting and technological innovation," commercial real estate research firm Delta Associates concluded in a mid-year report.
Indeed, the Washington, D.C., area, given its relatively promising future, has continued to hold some attraction for banks during these troubling times in the credit market. In May, Perseus Realty L.L.C. obtained $103.5 million in financing for 1110 Vermont Ave., a 309,500-square-foot office building in D.C.'s Central Business District. And in March, The JBG Cos. and Rockwood Capital L.L.C. got their hands on a $100.5 million loan for the 310,800-square-foot office property at 1101 K St., which is also in the city's CBD.
By: Barbra Murray, Contributing Editor
The chilly credit market apparently warmed up for Vornado Realty Trust, which just wrapped up the refinancing of its 442,000-square-foot office property just outside of Washington, D.C., in Arlington, Va., courtesy of an $82.5 million loan.
Carrying the address of 2011 Crystal Dr., the newly refinanced asset sits between Reagan National Airport and the Pentagon in Arlington's Crystal City submarket. The 11-story Class A building, developed in 1984, is fully leased to a bevy of tenants including Conservation International, equity research firm Integreon and the American Association for Homecare.
Vornado's loan came with a fixed rate of 7.3 percent and two optional one-year extensions beyond the August 2017 maturity date. According to SEC files, the Paramus, N.J.-based REIT's outstanding balance on the 2011 Crystal mortgage, which was scheduled to mature in October of this year, was approximately $38.2 million at an interest rate of 6.88 percent as of the close of the first quarter of 2009.
Clearly, the loan allows Vornado to do more than just repay the existing loan on the office property. With $44.5 million to spare, the company is left with quite a bit of pocket change. Plans for the remaining proceeds have not been publicized and Vornado declined to comment on the transaction or the company's plans for the future.
A high-quality building and a jam-packed tenant roster are veritable prerequisites for financing in the presently challenging lending climate, yet those criteria still offer no guarantee with today's tight-fisted and ultra-cautious banks. But location, in some cases, still carries a certain degree of weight. Undeniably, the Greater Washington, D.C., area has not escaped the ravages of the downtrodden economy, but the future for the area holds a certain promise not frequently seen in most other regions. "Although market conditions in Northern Virginia have slowed due to the national recession, this sub-state area is poised for healthy long-term growth given its focus on government contracting and technological innovation," commercial real estate research firm Delta Associates concluded in a mid-year report.
Indeed, the Washington, D.C., area, given its relatively promising future, has continued to hold some attraction for banks during these troubling times in the credit market. In May, Perseus Realty L.L.C. obtained $103.5 million in financing for 1110 Vermont Ave., a 309,500-square-foot office building in D.C.'s Central Business District. And in March, The JBG Cos. and Rockwood Capital L.L.C. got their hands on a $100.5 million loan for the 310,800-square-foot office property at 1101 K St., which is also in the city's CBD.
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