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In order to enhance its financial flexibility, Taubman Centers Inc. (TCO - Analyst Report) recently increased its erstwhile $650 million primary revolving line of credit to $1.1 billion. Additionally, it includes a provision, which will enable the company to increase its borrowing capacity up to $1.5 billion, if fully exercised.
This real estate investment trust (REIT) stated that the new line of credit, which will mature in 2017, bears a one-year extension option and its pricing is based on its total leverage ratio. As of Mar 1, 2013, the revolving credit facility bears a rate at LIBOR plus 1.45% with an annual 0.20% facility fee.
Notably, the Taubman’s line of credit is guaranteed by the entities that own Twelve Oaks Mall in Novi, The Shops at Willow Bend in Plano, Fairlane Town Center in Dearborn and Dolphin Mall in Miami.
J.P. Morgan Securities LLC – part of JPMorgan Chase & Co. (JPM - Analyst Report) – acted as the joint lead arranger and sole book-running manager for the transaction. Whereas, PNC Bank N.A. of PNC Financial Services Group, Inc (PNC - Analyst Report) and U.S. Bank N.A. of U.S. Bancorp (USB - Analyst Report) acted as joint lead arrangers and co-syndication agents.
This is an important strategic financial arrangement for Taubman as it will provide the company additional liquidity. Moving forward, the strategic move could help seize favorable investment opportunities, which in turn will likely boost its top-line growth.
Subsequent to the end of the fourth quarter, Taubman accomplished a 10-year, non-recourse financing worth $225 million in Great Lakes Crossing Outlets (Auburn Hills, Mich.). The loan bears a fixed-rated interest of 3.63%. The company got around $100 million of excess proceeds following the repayment of the prior outstanding $126 million, 5.25% fixed rate loan. The company used the excess proceeds to lessen its outstanding borrowings under the company's revolving lines of credit.
Last month, Taubman reported fourth quarter 2012 results with adjusted FFO (funds from operations) of $1.00 per share exceeding the Zacks Consensus Estimate by 3 cents and prior-year quarter earnings by 7 cents. As of Dec 31, 2012, Taubman’s cash position stood at $32.1 million.
Taubman currently retains a Zacks Rank #2 (Buy).
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.
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