Back to top

Analyst Blog

CubeSmart (CUBE - Snapshot Report), a real estate investment trust (REIT), announced amendments to its credit facility and term loan agreements worth $800 million. The move is expected to enable the company to reduce borrowing costs and extend its debt maturity.

CubeSmart amended about $200 million in senior unsecured term loan facility. The term loan facility consisted of two term loans of $100 million each. The maturity date of the “Term Loan A”, a 5-year loan, was extended to Jun 2018 from Jun 2016. However, the maturity date of the “Term Loan B” remained unchanged. Moreover, CubeSmart’s move enabled it to reduce the interest rate of “Term Loan A” by 35 basis points to LIBOR plus 150 basis points.

Additionally, CubeSmart amended about $600 million worth of senior unsecured credit facility. The credit facility consisted of “Term Loan C” worth $100 million, “Term Loan D” worth $200 million and a revolving credit worth $300 million. “Term Loan C’, due to mature in Dec 2014, remained unchanged.  However, the maturity date of ‘Term Loan D” was extended to Jan 2019 from Mar 2017 and that of revolving credit was revised to Jun 2017 from Dec 2015, with a 1-year extension option.

Furthermore, CubeSmart’s move enabled it to reduce the interest rate of credit facility by 25 basis points each to LIBOR plus 150 basis points for both “Term Loan C” and “Term Loan D”. The interest rate of revolving credit was reduced by 20 basis points to 160 basis points.

However, CubeSmart did not foray into any new hedging arrangements along with the amended facilities. Therefore, the company's existing hedging arrangements stand as before.

CubeSmart’s move to amend its credit facility and term loan agreement is a strategic fit. Also, this move is expected to aid the company continue with its portfolio repositioning activity.

Some other firms that have recently amended credit facility and term loan agreements include UDR, Inc. (UDR - Analyst Report) and Diamondrock Hospitality Co. (DRH - Snapshot Report).

UDR recently amended and re-priced its revolving credit facility worth $900 million and term loans worth $350 million, respectively. On the other hand, in Nov 2012, DiamondRock Hospitality amended its $200 million senior unsecured credit facility, which will enable the company to reduce borrowing costs and extend its debt maturity.

CubeSmart currently carries a Zacks Rank #2 (Buy). CommonWealth REIT (CWH - Snapshot Report) is also worth a look with a Zacks Rank #1 (Strong Buy).

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
RPC INC RES 24.91 +8.35%
LITHIA MOTO… LAD 94.59 +4.60%
DELTA AIR L… DAL 39.15 +3.90%
FLAMEL TECH… FLML 14.51 +3.50%
SOUTHWEST A… LUV 28.87 +2.92%