Magazine article American Banker

Morgan May Hold $700M of Hard-to-Sell REIT Loan

Magazine article American Banker

Morgan May Hold $700M of Hard-to-Sell REIT Loan

Article excerpt

With the deadline for commitments passed, J.P. Morgan & Co. expects to keep as much as $700 million of a $2.25 billion loan for Meditrust Corp. on its books, market sources said.

By holding so much of the loan, Morgan is indicating that it is having difficulty syndicating what has turned into a bad-luck credit.

A marketing effort by Salomon Smith Barney Inc. for the same Meditrust financing failed in May. Morgan was hired by Meditrust to syndicate the deal in June.

The bank's decision to carry a piece of the Meditrust loan stood out in a strong week for syndicated lending.

Three deals worth a combined $19 billion are on the market and are expected to sell out.

J.P. Morgan is lead arranger of the Meditrust loan, working with co- underwriters Bankers Trust Co., Fleet Financial Group, and BankBoston Corp.

These banks took a commitment of $563 million each in hopes of syndicating the loan to other lenders.

Sources say NationsBank Corp. committed $150 million to the deal, and Oak Brook Bank in Illinois committed $10 million.

Despite its own high commitment to the loan, Morgan has had some success with the Meditrust deal.

It restructured the financing last week to increase the amount available to institutional investors, who eventually committed to $1.25 billion worth of the loan.

Morgan expected to take a substantial portion of the loan to build a relationship with Meditrust, sources said. A real estate investment trust in Needham Heights, Mass., Meditrust specializes in health care-related properties. It plans to use the loan to pay for a hotel chain and golf- course holding company.

Meanwhile, three large issues in the market gained support this week. They are:

A $7 billion loan to Lyondell Petrochemical Inc. for its buyout of Arco Chemical Co. led by J.P. Morgan, Donaldson, Lufkin & Jenrette, BankAmerica Corp. …

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