AFR closes on $180m refi.

American Financial Realty Trust, a real estate investment trust focused on acquiring and leasing properties occupied by financial institutions, today announced it has completed the refinancing of the mortgage debt on its Dana Commercial Credit portfolio of office properties.

The refinancing extended the term of the mortgage from approximately five years to twelve years with an increase in the debt balance from approximately $162 million to the new refinance amount of $180 million secured at a fixed rate of 5.61%.

The financing substantially reduced annual debt amortization which will reduce the Company's use of short term borrowings over the initial remaining five years of the old debt. This reduction in short-term borrowings on a floating rate basis, which are currently rising, compensates for nearly one-half of the additional cost resulting from a higher interest rate on the new debt (157 basis points). There was no penalty incurred as a result of the early retirement of debt.

Babson Capital Management LLC placed 100% of the refinancing on behalf of its parent, Massachusetts Mutual Life Insurance Company, for 13 properties acquired by AFR from Dana Commercial Credit in 2003. The properties are primarily occupied by Bank of America, N.A.

The transaction was arranged by the New York office of Holliday Fenoglio Fowler.

The new loan is collateralized by these 13 properties, which comprise approximately 3.7 million rentable square feet in the southeastern United States and Washington, D.C. The financing also extends AFR's overall average length of debt from 11.5 to 11.9 years, as the Company continues to execute its strategy of match funding its long-term leases with long-term fixed rate debt. Exclusive of the Company's short-term debt related to a pooling of assets for a securitization to be executed in the second quarter of 2006, the average term of long-term rate debt is 12.4 years.

"Completion of the refinancing of this portfolio is consistent with our announced refinancing strategy, which is focused on extending the term of existing debt, while selectively reducing or eliminating amortization requirements, and increasing internally generated cash flow ($20.5 million)," commented Dave Nettina, chief financial officer at American Financial.

"The improvement of our debt structure provides cash for acquisitions, capital improvements and dividend coverage. It enables us to reduce our use of short-term financing by the amount of amortization savings, while leveraging the asset at roughly 50% (based on appraised value)."

Mr. Nettina added, "We were particularly impressed with Babson Capital's professional team and its ability to close quickly on a geographically diverse portfolio of properties that are subject to a complex lease structure.

"The term and structure of this financing provides AFR more flexibility at a lower cost of funds than otherwise available in the securitized marketplace."