AvalonBay Mortgages 14 Properties For $741.1M

EILEEN AJ CONNELLY

NEW YORK (AP) — Residential community developer AvalonBay Communities Inc. on Tuesday said it struck a deal to mortgage 14 of its communities for a total of $741.1 million. The Alexandria, Va., company intends to use the money to pay down its unsecured credit facility, retire unsecured debt securities and other maturing debt and as working capital.

In a regulatory filing with the Securities and Exchange Commission, the real estate investment trust said it expects to mortgage properties in seven states and Washington, D.C., in a deal with Deutsche Bank Berkshire Mortgage Inc. The mortgages are expected to close by Friday.

The loans will carry a fixed 5.86 percent annual interest rate for 10 years, and each will require interest-only payments for the first two years. Each loan will be subject to a prepayment penalty for the first nine years and nine months.

Shares of AvalonBay closed Monday's trading session down $5.13, or 9.2 percent, at $50.72, as the broader market dropped about 2 percent. In after-hours trading, the stock gained 8 cents.