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Wednesday, 10 November 2010

Construction Loan Against Atlanta Office Project Gets Extension

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Commercial Real Estate Direct Staff Report

Duke Realty Corp. obtained a four-year extension until July 2015 on a construction loan against a downtown Atlanta office project that had been struggling to lease space.

The Atlanta REIT said it obtained the extension on the debt against the 425,000 square feet of office space at 3630 Peachtree after signing tenants to leases for 90,000 sf, boosting the property's occupancy level by 21 percentage points to 30 percent.

Bank of America had provided $187 million of construction financing for the property.

Duke is partners with Pope & Land Enterprises Inc. in building the office space in the bottom half of the 34-story, mixed-use building at Peachtree and Peachtree-Dunwoody roads. The construction loans had been scheduled to mature next July.

The extension carries an interest rate pegged to Libor plus 135 basis points through next July and Libor plus 250 bp after that. Christie Kelly, Duke's chief financial officer, told analysts that the extension was based on the lenders' confidence in the long-term prospects for the project.

The REIT in the third quarter of last year wrote down the value of the property by $50.7 million. At the time, it said it was unlikely that it would recover its $14.4 million investment in it.

A venture of Novare Group and Post Properties is building residential condominiums in 3630 Peachtree's upper floors.

Comments? E-mail John Covaleski or call him at (267) 247-0112, Ext. 208.



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Additional Info

  • Syndicate to Realpoint: No
  • Cities: Atlanta
  • States: Georgia
  • Sector: Office
  • Subject: Mortgages/Financing (MOR)
  • Deal Name: Bear Stearns Commercial Mortgage Securities Trust, 2006-PWR12
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