iStar Financial forgoes $500 million paydown on $1 billion facility

By Angela McDaniels

Tacoma, Wash., Sept. 30 - iStar Financial Inc. elected not to make an optional $500 million payment on its $1 billion first-priority credit facility due June 26, 2012 on Thursday, according to an 8-K filing with the Securities and Exchange Commission.

The company said that it will instead direct payments and prepayments of principal and net cash sale proceeds received from the collateral for the credit agreement to the lenders until the lenders receive $500 million in payments.

iStar will retain interest and rental payments received from the collateral.

The company may elect at any time to pay any unpaid balance of the $500 million payment. iStar said that its available cash currently exceeds $500 million.

The election not to make the payment is not a default or an event of default and will not trigger any change in the interest rates on the credit agreement or iStar's other debt, according to the SEC filing.

JPMorgan Chase Bank, NA is the administrative agent.

iStar is a New York-based finance company focused on the commercial real estate industry.

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