Preferred Apartment Communities to Acquire a Class A Office Building in Atlanta
Staff Report From Metro Atlanta CEO
Friday, December 9th, 2016
Preferred Apartment Communities, Inc. announced that on December 2, 2016, Preferred Apartment Communities Operating Partnership, L.P., its operating partnership, committed to acquire a Class A office building in the Central Perimeter submarket of Atlanta, Georgia pursuant to a signed Agreement of Purchase and Sale with SPUS6 Three Ravinia, LP. The office building is 98% leased to a high credit tenant base, including InterContinental Hotels Group and State Farm, with an average remaining lease term of approximately 10 years. "Three Ravinia is a trophy asset, which we believe will be a very substantial contributor to PAC's earnings," said John A. Williams, PAC's Chairman and Chief Executive Officer. Leonard A. Silverstein, PAC's President and Chief Operating Officer, added, "Our primary focus remains on owning and operating multifamily communities, although, we will continue to consider on a limited basis compelling opportunities outside our core multifamily business, such as Three Ravinia, where we have significant management expertise." PAC expects this transaction will close later this month.
The Company expects to fund this transaction with planned debt financing and a combination of the following: (i) cash on hand; (ii) borrowings under the Company's senior secured credit facility with KeyBank National Association; (iii) net proceeds from additional issuances of our Series A Redeemable Preferred Stock and Warrant Unit offering; and (iv) proceeds from the anticipated disposition of certain assets.
The Company has submitted its loan application and locked the interest rate with John Hancock to provide a non-recourse first mortgage loan on Three Ravinia at approximately 55% of the gross purchase price. PAC expects the Loan will be non-recourse to the borrower, will mature in 25 years, and will bear interest at a fixed rate of 4.46% per annum. The Company expects the Loan will require monthly installments of interest only through the first five years of the Loan and will amortize over a 30-year term for the balance of the stated term. PAC expects the Loan will only be secured by Three Ravinia and there will be no loan guaranties by the Company or PAC-OP.