FleetBoston Financial is in the market with a deal for Crescent Real Estate Equities that is testing a new benchmark for real estate investment trust credits, bankers said. The Fort Worth, Texas, REIT is looking to refinance its $850 million credit facility, which is provided by UBS Warburg and Fleet and is priced at LIBOR plus 2 3/4%. The approximately $400 million refinancing--which is being shopped at LIBOR plus 1 3/4%--also will eliminate the mortgage security interest offered to lenders, thereby converting the facility to an unsecured deal.
The deal's pricing is seen as razor thin given Crescent's credit rating of Ba3/B+. If successful, the refinancing could change the face of the entire real estate lending market, one banker said, adding that a REIT with a comparable rating has never received pricing at these levels. "Every CFO at every REIT would be interested," he said. A Crescent spokeswoman confirmed that it was in the market to refinance its facility but added that no deal with Fleet had been finalized. The REIT is in talks with several banks, she added. Calls to Fleet and UBS were not returned.
Fleet has already marketed the deal, which is not yet underwritten, to a number of banks, including J.P. Morgan Chase, Citibank, Deutsche Banc Alex. Brown, Bank of America and Commerzbank.