Federal Realty Investment Trust (FRT) is raising capital through senior unsecured notes issuance to strengthen its liquidity position, meet near term debt maturities and other corporate needs. However, shares of Federal Realty dipped around 0.8% during the regular trading session on Nov 11, on broader market concerns.
In particular, Federal Realty priced the public offering of 4.50% senior unsecured notes worth $250 million at 98.86% of the principal amount. The senior unsecured notes, due Dec 1, 2044, carries a yield to maturity of 4.57%. Starting Jun 1, 2015, the interest on the notes will be payable on Jun 1 and Dec 1 of each year. The offering is anticipated to close on Nov 14, 2014, upon fulfillment of customary closing conditions.
Specifically, Federal Realty plans to use the net proceeds to buy back all of its outstanding 5.65% notes due 2016 and pay off its East Bay Bridge property related mortgage loan. Moreover, the company intends to use the remaining amount for meeting general corporate needs such as reducing the balance under its revolving credit facility.
Reputed financial institutions – Wells Fargo Securities, LLC of Wells Fargo & Company (WFC), Merrill Lynch, Pierce, Fenner & Smith Incorporatedof Bank of America Corporation (BAC) and Deutsche Bank Securities Inc. of Deutsche Bank AG (DB) assisted Federal Realty as joint book-running managers for the public offering.
For Federal Realty, which exited third-quarter 2014 with cash and cash equivalents of approximately $23.9 million, the aforementioned transaction is a strategic fit. It will help the company in managing its debt obligations and interest expenses efficiently. Apart from this, increased financial strength will enable Federal Realty to invest in growth drivers that will go a long way in enhancing its portfolio’s quality.
Currently, Federal Realty carries a Zacks Rank #3 (Hold).
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