SL Green Realty Corp. (SLG) has revealed the receipt of assurance from lenders for modifying and extending its $1.2 billion revolving line of credit part of its $2.0 billion unsecured corporate credit facility. The move would help the company enjoy lower overall costs of funds and an extension of its debt maturity profile.
Specifically, this move allows the company an extension of its maturity date to Mar 2020 from Mar 2018 while the costs get reduced by 25 basis points. Expected to be accomplished in the first quarter of 2015, provided specific closing requirements are met, we believe this modification would help the company enjoy greater liquidity to pursue its growth needs.
Notably, SL Green exited third-quarter 2014 with cash and cash equivalents of $253.5 million, compared with $206.7 million as of Dec 31, 2013. Also, keeping its winning streak alive, SL Green reported a third quarter earnings surprise of 4.83%. Growth in top line and strong portfolio enhancement activity aided the results. Recently, the company also declared a 20% sequential increase in its fourth-quarter 2014 dividend.
As a matter of fact, SL Green is eyeing acquisition of top-class assets along with divestiture of the non-core ones. With its retail investments, the company is seeking to tap opportunities in New York City’s premium retail locations. Further, we believe an enhanced financial flexibility would add to this process of growth and leverage the capital market opportunities.
SL Green currently carries a Zacks Rank #3 (Hold). Investors interested in the REIT industry may consider better-ranked stocks like Cousins Properties Incorporated (CUZ), Host Hotels & Resorts, Inc. (HST) and Public Storage (PSA). All these stocks carry a Zacks Rank #2 (Buy).
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