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IPC Refinances 15 Office Buildings

TORONTO-The Canada-based REIT focused on US office assets comes to terms with a lender to refinance $148 million of long-term debt that is coming due in mid-2008.

By Brian K. Miller | Updated on May 26, 2005

TORONTO-IPC US REIT is refinancing $148 million of long-term debt that is due in June 2008. The locally based company focused on US office assets says it has agreed to terms with Barclays Capital on a new $153-million package of 10-year mortgages that have a fixed rate of 5.18%. The transaction is expected to close in June.The interest rate on the mortgages being paid off is 7.20%. IPC president/CEO Vinay Kapoor says that even though the new financing is slightly more than the previous financing, it will generate annual mortgage interest savings of $2.7 million. Those savings will offset the cost of defeasing the existing mortgages, which is approximately $16.5 million.”The opportunity to lock in fixed-rate financing at very favourable interest rates for a 10-year term provides the REIT with additional financial stability and removes future interest rate risk,” Kapoor adds. “As a result of this transaction, our near-term debt maturities are significantly reduced and the average cost of the REIT’s long-term debt will reduce from 6.3% to 5.9%.”IPC executive Dov Meyer was not immediately available Thursday morning to discuss which assets are being refinanced and how leverged each of the assets will be. IPC is the only REIT in Canada that invests exclusively in US commercial real estate. The REIT beneficially owns an 88% economic interest in IPC US and its affiliates, which manage and have ownership interests in 37 properties in the US comprising about 10.4 million sf of rentable area.

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