On September 12, 2007, Maguire Properties-355 S. Grand, LLC (“MP-355”), a wholly owned subsidiary of Maguire Properties, L.P., the operating partnership of which the registrant is the sole general partner and holds an approximate 86% interest, completed a new $400.0 million, five-year variable rate interest-only refinancing with Eurohypo AG, New York Branch (“Eurohypo”) for its property located at 355 South Grand Avenue, Los Angeles, California, known as “KPMG Tower.”
The amount and effective interest rate were revised from the $450.0 million loan amount contained in our letter of intent with Eurohypo and the all inclusive 6.81% interest rate due to changes in market conditions from the date of the letter of intent to the date we executed the Loan Agreement (as defined below).
The mortgage loan bears interest at a variable rate of LIBOR plus 1.50%. In anticipation of this loan, in June 2007 we entered into a forward-starting interest rate swap agreement to hedge this loan, which effectively fixes the LIBOR rate at 5.564% for an all inclusive rate of 7.06%. This loan matures on October 9, 2012 and is evidenced by a loan agreement, dated as of September 12, 2007, by and between MP-355 and Eurohypo (the “Loan Agreement”), and other customary loan documents.
The Loan Agreement requires the payment of interest only during the term of the loan. On and after six months from the closing date (as defined in the Loan Agreement), we may prepay this loan in whole or in part at our option after giving Eurohypo notice of at least ten business days.
Our net proceeds from the KPMG Tower refinancing, after repayment of the existing $210.0 million mortgage loan and payment of closing costs and loan reserves, were approximately $130 million. We used approximately $110 million of these proceeds to fully repay our $400.0 million term loan incurred in connection with the April 2007 acquisition of the Southern California Equity Office Properties portfolio, with the remainder expected to be used for general corporate purposes.
This description is qualified in its entirety by reference to the full text of the Loan Agreement, which will be filed by the Company.
