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PREIT Hedges Rates on $370M of Future Debt

PHILADELPHIA-Pennsylvania Real Estate Investment Trust locks in a blended 10-year swap rate on $120 million, starting in 2007 at nearly 4.7%, and another on $250 million, starting in 2008, at just over 4.8%.

By Marita Thomas | Updated on June 14, 2005

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PHILADELPHIA-Pennsylvania Real Estate Investment Trust has entered into interest-rate swap agreements as hedges against expected interest payments on a portion of its anticipated need for long-term debt. The aggregate notional, or face amount of the agreements is $370 million.

“The spread between short-term and long-term rates is now narrow,” Robert McCadden, EVP and CFO of the locally based shopping center REIT, tells GlobeSt.com, “which makes it economical to lock in interest rates on debt we plan in 2007 and 2008.” The anticipated debt derives, he says, from known obligations that are likely to require financing on some assets in the Crown portfolio and Rouse properties that were encumbered at above-market rates when PREIT acquired them.

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