Federal Realty Investment Trust took its time when making decisions about its new $300 million credit facility. "We spent a month or two meeting with banks making sure we were on the same page," said Andrew Blocher, v.p. of capital markets. "We were looking for a deal that would really make sense to us."
Federal chose some banks that had been involved in its previous facility, but purposely left some out. "We wanted to find banks that were very complimentary to the company...less capital intensive," Blocher said. "We didn't want to get in with investment banks...we wanted to find people who were providing services beneficial to our business strategy."
Federal found Rex Rudy, managing director at Wachovia Securities. "We spent a lot of time talking with [him] about wants and needs," Blocher said. "He's an amazing guy." He declined to comment on which banks the company ousted this time around, but according to company news releases, Wells Fargo, Key Bank, AmSouth Bank, Erst Bank and E. Sun Commercial were involved in the previous deal but not this one. Calls to those banks were not returned.
Wachovia led the previous facility and was re-enlisted as sole lead on the new credit. Federal Realty took out a $550 million credit facility in October 2003 that consisted of a three-year, $300 million revolver; a three-year, $100 million term loan and a five-year, $150 million term loan. "The market has changed pretty dramatically over the past three years since we did [that] deal," said Blocher. "But our credit has changed pretty dramatically over the past three years, too."
Federal Realty's credit rating was upgraded from BBB to BBB+ by Standard & Poor's and was placed on positive outlook with a rating of Baa2 by Moody's Investors Service earlier this year, according to Blocher. "As a result, we could decrease the rates for our borrowing," he said. Pricing on the old credit facility was at a floating rate of LIBOR plus 65 basis points and the new facility is LIBOR plus 42.5 basis points, Blocher said.