Federal Realty (FRT) Prices Reopened 3.20% Senior Notes
Zacks Investment Research | Aug 20, 2019 08:51AM ET
Federal Realty Investment Trust (NYSE:FRT) announced the pricing of a public offering of 3.20% notes, with $100-million aggregate principal amount due in 2029. The notes are priced at an effective yield to maturity of 2.744%.
Subject to the satisfaction of certain customary closing norms, the offering is anticipated to close on Aug 21, 2019.
Specifically, the debt obligations will be issued under the same terms and be of the same series as the $300 million of fixed-rate senior unsecured notes issued by the company on Jun 7, 2019. These notes, carrying an interest rate of 3.2%, are scheduled to mature on Jun 15, 2029. Hence, upon completion of the offering, Federal Realty will have anaggregate of $400 million of such series of notes outstanding.
Federal Realty plans to use the net proceeds from this issuance to repay balance outstanding under the company’s revolving credit facility and for other general corporate purpose. Notably, in the second quarter, the company amended its revolving credit facility, increasing the size from $800 million to $1 billion. The move also helped the company extend its maturity through options until 2025.
Federal Realty’s Cash Position
Federal Realty exited second-quarter 2019 with cash and cash equivalents of approximately $105.9 million, up from the $64.1 million reported at the end of 2018.
During the six-month period ended Jun 30, 2019, the company generated cash flow from operations of $242.3 million, down from the $263.1 million recorded during the comparable period last year.
Conclusion
By paying down its outstanding balances in the company’s credit facility, this offering will likely provide flexibility to Federal Realty. In addition, it reflects the company’s focus to address its financial obligations efficiently. Moreover, since unsecured notes can be borrowed at lower rates, the new debt will result in lower cost of capital, consequently strengthening its balance sheet and supporting growth.
Over the past year, shares of this Zacks Rank #3 (Hold) company have gained 1.8%, as against the Original post
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