One of the leading multifamily real estate investment trusts (REIT), UDR, Inc. (UDR - Analyst Report), amended and re-priced revolving credit facility worth $900 Million and term loans worth $350 Million, respectively. The move will enable the company to reduce borrowing costs and extend its debt maturity.
In particular, UDR’s move enabled it to reduce the interest rate of credit facility by 12.5 basis points to LIBOR plus 110 basis points. In addition, the facility fee also got reduced by 2.5 basis points to 20 basis points. Furthermore, the maturity date of the facility got extended to Dec 2017, with a 6-month extension option. Additionally, the new credit facility has increased the borrowing capacity to $1.45 billion.
Moreover, the new arrangements related to the unsecured term loans, worth $250 million and $100 million, helped in extending the maturity date to June 2018 from January 2016 and re-price them to LIBOR plus 125 basis points from LIBOR plus 142.5 basis points.
A consortium of top banking giants supported UDR in the transaction, with Wells Fargo Bank N.A. of Wells Fargo & Company (WFC - Analyst Report) and JPMorgan Chase Bank, N.A. of JPMorgan Chase & Co. (JPM - Analyst Report) acting as joint lead arrangers and joint book runners.
For UDR, whose liquidity amounted to $826 million as of Mar 31, 2013, the aforementioned moves would help in strengthening its financial flexibility and incur lower cost of capital. Therefore, they are strategic fits for the company and would position it better to continue with its portfolio repositioning activity.
UDR currently carries a Zacks Rank #3 (Hold). Better performing REITs include DiamondRock Hospitality Co. (DRH - Snapshot Report) with a Zacks Rank #2 (Buy).