Trustreet Properties has entered an interest rate swap to hedge its exposure to rate changes over the life of a five-year floating-rate USD175 million loan. The firm held an auction to choose the counterparty. Bank of America gave the most competitive bid and landed the deal, said Robert Lawless, senior v.p. of finance with the Orlando, Fla., restaurant real estate investment trust. All of the bidders have a business relationship with the trust.
In the swap, Trustreet will pay a fixed rate of 4.2% and receive a floating rate of one-month U.S. dollar LIBOR, Lawless explained. He added the trust wanted to hedge the full proceeds of the non-amortizing loan and decided to enter a swap because this takes advantage of today's historically low interest rates.
