Parkway Properties, a Jackson, Miss., real estate investment trust, has entered into a three-year interest rate swap with PNC Bank to protect itself against the possibility of rising rates.
In the swap, written on USD40 million notional, the trust locked in one-month LIBOR at 4.36%. Factoring in the spread it pays over LIBOR, the trust pays PNC Bank a total fixed rate of 5.685%, said William Flatt, the REIT cfo. In return, the trust receives a variable rate of one-month LIBOR plus the spread from PNC.
Flatt described the swap as a risk-maintenance tool used to hedge against rate increases on part of its USD190 million line of credit. The swap allows the trust to fix a portion of its balance sheet, he said.
