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Douglas Emmett extends maturities, lowers interest rates on over $1B of debt

Douglas Emmett Inc. extended maturities and lowered interest rates on more than $1 billion of debt and said it continues to expect funds from operations for the 2019 full year in a per-share range of $2.08 to $2.12.

During the third quarter, the office and multifamily real estate investment trust refinanced three loans totaling $920 million with secured, nonrecourse and interest-only loans.

This includes replacement of a $400 million loan set to mature in November 2022 with a $400 million loan maturing in September 2026. The loan carries interest at the London interbank offered rate plus 1.15%, effectively fixed using swaps at 2.44% per year through September 2024.

The company noted that it replaced a $340 million loan set to mature in April 2022 with a $415 million loan due in August 2026. The loan bears interest at Libor plus 1.10%, effectively fixed using swaps at 2.58% per year through April 2020 and thereafter at 3.07% per year through August 2025.

Meanwhile, a $180 million loan that was scheduled to mature in July 2022 was replaced with a $200 million loan maturing in September 2026. The new loan carries interest at Libor plus 1.20%, effectively fixed using swaps at 2.77% per year through July 2020 and thereafter at 2.36% per year through October 2024.

In July, the company paid off a $220 million loan that was scheduled to mature in December 2023.

The REIT said its third-quarter FFO will be negatively impacted by one-time noncash and cash refinancing costs equal to about 4 cents per share, while cash interest expense savings from the transactions in 2020 are expected to exceed 4 cents per share.

The S&P Global Market Intelligence consensus FFO estimate for 2019 is $2.11 per share.