AMB Subsidiary Closes $195M Construction Financing

TOKYO-AMB Tokai TMK, a Japanese entity of San Francisco-based industrial REIT AMB Property Corp. has closed a multi-advance project financing totaling yen 20 billion ($195 million). AMB Tokai will use the proceeds to pay down amounts borrowed under a separate revolving credit facility and to pay for construction of an 816,000-sf, seven-story logistics center near the Port of Tokyo’s Oi Container Terminal known as Otha Distribution Center. The loan is secured by a mortgage on the property planned for the distribution center and an additional mortgage on the to-be-built distribution center, according to an SEC filing. The financing agreement is among AMB Tokai TMK, AMB Property Corp., AMB Property LP, Sumitomo Mitsui Banking Corporation (SMBC), as administrative agent and sole lead arranger and book manager, and a syndicate of banks. The financing matures on October 31, 2006 and may be extended for one year at AMB Tokai TMK’s option, subject to certain conditions and the payment of an extension fee equal to 0.25% of the outstanding commitments under the loan at that time. The rate on the borrowings will generally be TIBOR plus a margin based on the credit rating of AMB Property LP’s long-term debt (currently 60 basis points per annum), not accounting for the fact that AMB Tokai TMK has purchased from SMBC an interest rate swap equal to 65% of the financing package.In addition, SMBC, AMB Tokai TMK and AMB Property LP signed a commitment letter wherein SMBC committed to purchase bonds that may be issued by AMB Tokai TMK in an amount between yen 10 billion and yen 15 billion. The bonds would be secured by the Ohta property and distribution center and would generally accrue interest at a rate of TIBOR plus 1.10% per annum. Because the swap is coterminous with the maturity date of the proposed bonds, AMB Tokai TMK will have fixed the interest rate payable at 2.42% on, in general, a principal amount equal to yen 13 billion.The bonds, if issued, would mature on October 31, 2012, and during the last four years of the term of the bonds, AMB Tokai TMK would be required to make quarterly principal payments in such amounts as are necessary to pay annual principal amortization of 1.6% of the original principal amount of the bonds during such period.