Chateau Communities has tapped Bank One to lead a $320 million bridge loan to fund the Greenwood Village, Colo.-based real estate investment trust's $570 million acquisition of CWS Communities Trust. The 364-day facility is priced at LIBOR plus 120 basis points, a Bank One official said. Bank One acted as sole lead arranger and administrative agent and was chosen because of a previous relationship with the REIT, he added. Chateau agreed to purchase Security Capital's 94.1% stake in the manufactured-home developer earlier this month. Tamara Fischer, cfo and director of investor relations, did not return calls by press time.
The REIT is currently looking into long term-financing options to repay the bridge loan and anticipates completing a bond offering in the next several months. Bank One has already been mandated to lead the bond offering, based on its senior title on the bridge loan. The bond offering will total about $200-250 million. The remainder of the bridge facility will be paid off with proceeds from asset sales over the next several months, the official added. Pricing on the bridge loan increases if the REIT holds the credit for longer than three months, leaving the incentive to complete the bond deal.
Bank One will look for three to five lenders to syndicate $75-100 million of the bridge loan. The bank will approach participants in Chateau's existing bank group and may invite several new lenders into the bridge line, the official said. Up-front fees have not yet been determined. Bank One is also the lead arranger for the REIT's $125 million credit line, which is priced at LIBOR plus 110 basis points.