Parkway Properties, Inc. (PKY - Free Report) – an office real estate investment trust (REIT) – announced the closure of an unsecured term loan placement worth $120 million, maturing on Jun 11, 2018. The company obtained the loan from Wells Fargo & Co. (WFC - Free Report) .
Notably, Parkway has to bear an interest rate based on LIBOR plus an applicable margin (initial rate is 1.45%). Also, the term loan has an option through which its size can be enhanced to as much as $250 million.
In addition, Parkway completed a floating-to-fixed interest rate swap totaling $120 million. This helped the company in locking the LIBOR at 1.61% for 5 years, which resulted in an initial all-in interest rate of 3.06%.
We expect the strategic move to improve the company’s liquidity position and position it favorably to pursue investment opportunities. Moreover, the interest rate swapping provides an advantage to the company in terms of limiting financing costs.
As of Mar 31, 2013, Parkway had $74.6 million of cash and cash equivalents. It also had $125.0 million outstanding under its unsecured term loan but no outstanding amount under its revolving credit facility.
Parkway owns, acquires and manages premium office properties in vibrant submarkets in the Sunbelt region of the U.S. As of Apr 1, 2013, the company had interest in 45 office properties (spanning approximately 13.0 million square feet) located across 8 states.
Parkway currently carries a Zacks Rank #3 (Hold). However, other well performing REITs include DCT Industrial Trust Inc. (DCT - Free Report) and CommonWealth REIT (CWH - Free Report) , both of which carry a Zacks Rank #2 (Buy).