Mall Giant Generates $730 Million in 'Excess' Proceeds This Year from Refinancings
General Growth Properties Inc. (NYSE: GGP
) has refinanced $1.2 billion of property-level debt this summer, cutting its interest rate more than 1.6% in the process. What's more, the REIT is boasting that it netted some big payoffs from its financial moves.
The new loans have a weighted average interest rate and term of 5.15% and 10 years, respectively, as compared to a rate of 6.82% and a remaining term-to-maturity of 2.5 years. The transactions generated approximately $224 million of net proceeds after repayment of existing mortgage notes.
"The mortgage markets continue to be an attractive source of capital for our properties and we have closed and expect to close with a range of life companies and CMBS dealers," Michael Berman, GGP CFO, told analysts this past week. "We continue to look to finance at loan-to-value ratio, generally in the 50% to 60% range."
"On a year-to-date basis, the company has completed approximately $4.4 billion ($4.1 billion at share) of property-level financings generating net proceeds of approximately $527 million," Berman said. "As a result of these transactions, the average interest rate decreased 115 basis points from 5.64% to 4.49%."
The retail REIT is shooting to refinance $5.3 billion in property debt this year.
Total loan spreads have widened a bit in the past few months, Berman said. Borrowing coupons for 10-year deals are generally less than 4.5%.
Most of the financing were 10-year maturities, with an average coupon of 4.2% and an average spread to treasury of less than 225 basis points.
"We're in the market with our last remaining 2012 maturing loans and are also preparing for another financing with a maturity date of early 2013," Berman said. "We anticipate achieving similar terms for what we have closed on so far. We will have generated sufficient proceeds to repay the $350 million of unsecured Rouse bonds coming due in September."
"By the end of this year, we will have refinanced approximately $5.3 billion of mortgages at share, taking the average rate from a little over 5.6% to an average rate of less than 4.5% on the refinanced mortgages," he said. "Approximately, $1.8 billion for our 2012 maturities and the remainder were opportunistic financings."
"We expect to have generated approximately $730 million in excess proceeds this year," he said.
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