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Corporate Office Properties Trust , also known as COPT, has priced a public offering of $400 million of senior notes through its operating partnership, Corporate Office Properties, L.P.
The 2.250% senior notes will mature in 2026 and will be fully guaranteed by the company. The offering is anticipated to close on Sep 17, 2020, subject to customary closing norms.
The net proceeds from the offering are expected to be used to fund the redemption of any and all of the operating partnership’s 3.700% senior notes due 2021. This is likely to result in $9 million of loss on the early extinguishment of the securities. Any remaining amount will be allocated for general corporate purposes, including repayment of the outstanding balance of the revolving credit facility.
With the note issuance, the company will incur $53 million in loss related to certain derivative instruments earlier assigned as cash flow hedges of interest expenses on $225 million of the company’s projected future borrowings, which is less likely to occur now.
Moreover, Corporate Office Properties plans to shed its stake in specific operating properties during fourth-quarter 2020 and anticipates recognizing $30 million of gains on these deals. This is likely to benefit the company’s Dec-end quarter’s bottom line.
In fact, these announcements call for a change in its earnings outlook for the third and fourth quarters, and the current year.
Markedly, funds from operations (FFO) per share, as adjusted, are being lowered to (3 cents)-(1 cent) from the previously mentioned 51 cents-53 cents for the third quarter. The same for 2020 is being reduced to $1.41-$1.45 from $2.05-$2.09 stated earlier.
Moreover, earnings per share (EPS) are being lowered to (38 cents)-(36 cents) from the previously mentioned 16 cents-18 cents for the third quarter. The same for the fourth quarter and 2020 is being improved to 43-45 cents and 48-52 cents, respectively, from 17-19 cents and 76-80 cents stated earlier.
Notably, the company’s efforts to strengthen its liquidity in these testing times and tap the debt market amid a low interest-rate environment are strategic fits. It has a strong balance sheet, with $701 million of liquidity as of the second-quarter end. Moreover, the company has no maturities until 2021.
However, the notes offering increases its long-term financial obligation. Moreover, early retirement of debt will result in the company incurring significant charges and losses, thereby, affecting bottom-line growth in the third quarter.
Shares of this Zacks Rank #3 (Hold) company has depreciated 20.3% compared with its industry’s decline of 8.4% over the past year.
Duke Realty Corporation’s Zacks Consensus Estimate for 2020 FFO per share has been revised 3.5% upward to $1.49 over the past two months. The company currently carries a Zacks Rank of 2 (Buy).
Sabra Healthcare REIT, Inc.’s (SBRA - Free Report) FFO per share estimates for the ongoing year have been revised 4.9% upward to $1.72 over the past month. The company currently carries a Zacks Rank of 2.
Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
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Corporate Office Properties prices Senior Notes, Revises View
Corporate Office Properties Trust , also known as COPT, has priced a public offering of $400 million of senior notes through its operating partnership, Corporate Office Properties, L.P.
The 2.250% senior notes will mature in 2026 and will be fully guaranteed by the company. The offering is anticipated to close on Sep 17, 2020, subject to customary closing norms.
The net proceeds from the offering are expected to be used to fund the redemption of any and all of the operating partnership’s 3.700% senior notes due 2021. This is likely to result in $9 million of loss on the early extinguishment of the securities. Any remaining amount will be allocated for general corporate purposes, including repayment of the outstanding balance of the revolving credit facility.
With the note issuance, the company will incur $53 million in loss related to certain derivative instruments earlier assigned as cash flow hedges of interest expenses on $225 million of the company’s projected future borrowings, which is less likely to occur now.
Moreover, Corporate Office Properties plans to shed its stake in specific operating properties during fourth-quarter 2020 and anticipates recognizing $30 million of gains on these deals. This is likely to benefit the company’s Dec-end quarter’s bottom line.
In fact, these announcements call for a change in its earnings outlook for the third and fourth quarters, and the current year.
Markedly, funds from operations (FFO) per share, as adjusted, are being lowered to (3 cents)-(1 cent) from the previously mentioned 51 cents-53 cents for the third quarter. The same for 2020 is being reduced to $1.41-$1.45 from $2.05-$2.09 stated earlier.
Moreover, earnings per share (EPS) are being lowered to (38 cents)-(36 cents) from the previously mentioned 16 cents-18 cents for the third quarter. The same for the fourth quarter and 2020 is being improved to 43-45 cents and 48-52 cents, respectively, from 17-19 cents and 76-80 cents stated earlier.
Notably, the company’s efforts to strengthen its liquidity in these testing times and tap the debt market amid a low interest-rate environment are strategic fits. It has a strong balance sheet, with $701 million of liquidity as of the second-quarter end. Moreover, the company has no maturities until 2021.
However, the notes offering increases its long-term financial obligation. Moreover, early retirement of debt will result in the company incurring significant charges and losses, thereby, affecting bottom-line growth in the third quarter.
Shares of this Zacks Rank #3 (Hold) company has depreciated 20.3% compared with its industry’s decline of 8.4% over the past year.
Stocks to Consider
Alpine Income Property Trust, Inc.’s (PINE - Free Report) FFO per share estimates for 2020 have been revised 4.4% upward to $1.18 over the past week. It currently sports a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Duke Realty Corporation’s Zacks Consensus Estimate for 2020 FFO per share has been revised 3.5% upward to $1.49 over the past two months. The company currently carries a Zacks Rank of 2 (Buy).
Sabra Healthcare REIT, Inc.’s (SBRA - Free Report) FFO per share estimates for the ongoing year have been revised 4.9% upward to $1.72 over the past month. The company currently carries a Zacks Rank of 2.
Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
Breakout Biotech Stocks with Triple-Digit Profit Potential
The biotech sector is projected to surge beyond $775 billion by 2024 as scientists develop treatments for thousands of diseases. They’re also finding ways to edit the human genome to literally erase our vulnerability to these diseases.
Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Our recent biotech recommendations have produced gains of +50%, +83% and +164% in as little as 2 months. The stocks in this report could perform even better.
See these 7 breakthrough stocks now>>