Chattanooga, Tenn-based CBL Associates Properties two weeks ago closed and tapped a new five-year, $212 million loan to fund its $1.3 billion acquisition of The Richard E. Jacobs Group's interests in 21 malls and other properties. John Foy, cfo, said the $124 million cash portion of the transaction was funded with $120 million it drew on the new loan as the remaining $92 million will be used for capital improvements. Wells Fargo led the deal and participants included U.S. Bank, FleetBoston Financial, Key Bank, and Commerce Bank-the only bank that has not previously participated on a company loan. Foy said the company's long-standing relationship with Wells Fargo drove it to choose the bank as the lead on the credit. Merrill Lynch advised on the acquisition.
Foy said the new facility is a two-year deal with an option to extend to five-years, but he expects the company to issue long-term debt to pay it down. The timetable on a future bond deal has not been determined. The credit, consisting of only one tranche, is priced roughly at LIBOR plus 11⁄2%, but the spread is subject to change as pricing is tied to a grid based on debt versus net asset value. "This loan is unsecured so it's a little pricier," noted Foy. The company's other lines of credit which total $245 million are priced at LIBOR plus1%.