Federal Realty Investment Trust (FRT - Analyst Report) is raising capital through notes issuance. The company, in particular, disclosed the pricing of senior unsecured notes to strengthen its liquidity position, meet near term debt maturities and other corporate needs.
Federal Realty priced the public offering of 3.95% senior unsecured notes worth $300 million at 99.018% of the principal amount. The senior unsecured notes, due Jan 15, 2024, carry a yield to maturity of 4.069%. Starting Jul 15, 2014, the interest on the notes will be payable on Jan 15 and Jul 15 of each year. The offering is anticipated to close on Dec 9, 2013, upon fulfillment of customary closing conditions.
Specifically, Federal Realty plans to use the net proceeds to buy back all of its outstanding 5.95% notes due 2014 and to repay outstanding amount of around $72 million under its revolving credit facility. Moreover, the company intends to use the remaining amount for meeting general corporate needs such as portfolio repositioning activity.
Reputed financial institutions – J.P. Morgan Securities LLC of JPMorgan Chase & Co. (JPM - Analyst Report), Wells Fargo Securities, LLC of Wells Fargo & Company (WFC - Analyst Report) and Citigroup Global Markets Inc. of Citigroup, Inc. (C - Analyst Report) assisted Federal Realty as joint book-running managers for the public offering.
For Federal Realty, which exited the third quarter 2013 with cash and cash equivalents of $127.8 million, the aforementioned transaction is a strategic fit. It will help the company in managing its debt obligations and interest expenses efficiently. Apart from that, 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).