Kimco Realty Corp. (KIM - Analyst Report) disclosed the closure of a new unsecured revolving credit facility worth $1.75 billion. This replaced an existing facility of the same value. The move is aimed at strengthening the balance sheet and availing credit facility at competitive terms.
This new facility bears an annual interest rate of LIBOR (London Inter-Bank Offer Rate) plus 92.5 basis points on drawn funds. Through an accordion feature, the facility can be amplified to $2.25 billion. Moreover, the initial maturity date of March 17, 2018 can be extended to March 17, 2019, using the two additional six-month options.
Additionally, this new credit facility provides Kimco a distinctive feature to borrow loan in other currencies such as Canadian dollars, Euro, British pound sterling and Japanese yen, up to a sub-limit of $500 million.
Kimco obtained the credit revolver in commitment from 23 lending institutions. Wells Fargo Securities, LLC of Wells Fargo & Company (WFC - Analyst Report), RBC Capital Markets of Royal Bank of Canada (RY - Snapshot Report) and J.P. Morgan Securities LLC of JPMorgan Chase & Co. (JPM - Analyst Report) assisted Kimco as joint book runners.
We expect the strategic move to improve the company’s liquidity position and pave the way for a rise in shareholder’s value going forward. As a matter of fact, Kimco has a considerable track record of conservative capital management. As of Dec 31, 2013, the company’s cash and cash equivalents stood at $148.8 million, up from $141.9 million as of Dec 31, 2012.
Kimco is scheduled to report the first-quarter 2014 results on May 7, after the closing bell. The Zacks Consensus Estimate for 2014 funds from operations (FFO) for the quarter is currently pegged at 34 cents per share.
Kimco currently carries a Zacks Rank #3 (Hold).
Note: FFO, a widely used metric to gauge the performance of REITs, is obtained after adding depreciation and amortization and other non-cash expenses to net income.