In order to reduce its debt,DDR Corp. (DDR - Analyst Report) priced the underwritten public offering of $300 million worth 3.500% senior unsecured notes at 99.327% of the principal amount. The offering is anticipated to close by Nov 26, 2013, upon fulfillment of customary closing conditions.
The senior unsecured notes, due 2021, have a yield to maturity of 3.607%. The interest on the notes is to be paid semi annually – Jan 15 and Jul 15. The first interest is payable on Jul 15, 2014.
In particular, this retail real estate investment trust (REIT) intends to utilize the net proceeds to pay off its outstanding balance under its unsecured revolving credit facility worth $750 million. The remaining amount will be used to meet other corporate needs, including secured and unsecured debt repayments.
Notably, a consortium of leading financial institutions is assisting DDR in this underwritten public offering. Among them, Wells Fargo Securities, LLC of Wells Fargo & Co. (WFC - Analyst Report), Scotia Capital (USA) Inc., Citigroup Global Markets Inc. of Citigroup, Inc. (C - Analyst Report), RBS Securities Inc. and U.S. Bancorp Investments, Inc. of U.S. Bancorp (USB - Analyst Report), are serving as the joint book-running managers.
For DDR, whose cash amounted to $35.4 million as of Sep 30, 2013, the aforementioned transaction is strategic fit, as we expect it to provide greater financial flexibility to the company. Notably, DDR recently received a rating upgrade from Moody’s Investors Service.
The company now enjoys senior unsecured and preferred equity ratings of Baa2 and Baa3, which were raised from Baa3 and Ba1, respectively. Further, the rating outlook was revised to stable from positive.
The uptick was an acknowledgement of DDR’s high quality property portfolio and its efforts towards enhancing its value. These activities preserve investor confidence in the stock and help boost its creditworthiness in the market.
DDR currently carries a Zacks Rank #3 (Hold).