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Hannon Armstrong (HASI) to Fund Green Projects With Debt Capital

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Hannon Armstrong Sustainable Infrastructure Capital, Inc. (HASI - Free Report) recently upsized its previously-announced private senior unsecured notes offering from $750 million to $1 billion in aggregate principal amount due in 2026.

The notes have been issued as senior unsecured obligations and carry a coupon rate of 3.375%. The offering is anticipated to close on Jun 28, 2021, subject to customary closing norms.

The company plans to utilize the net proceeds of this offering to redeem 5.250% senior notes maturing in 2024, which are green bonds. Following this allocation, incremental net proceeds will be used to acquire or refinance, eligible green projects.

Nonetheless, before the full investment of such net proceeds, Hanon Armstrong plans to invest capital in interest-bearing accounts and short-term, interest-bearing securities. This is in line with the company's intention to continue to qualify as a REIT for taxation purposes.

Notably, its efforts to strengthen its near-term liquidity in these testing times and opportunistically tap the debt market amid the current low-interest-rate environment are strategic fits. In fact, as of the first-quarter 2021 end, the company had $232 million in cash.

Also, since the new notes will carry a coupon rate lower than the green bonds that will be redeemed, the offering is likely to result in notable interest expense savings.

Moreover, in April, the company established a sustainability-linked unsecured revolving credit facility, which enhanced its liquidity. Specifically, it closed a $400-million senior unsecured sustainability-linked revolving credit facility that replaced the prior $50-million senior unsecured revolving credit facility established in first-quarter 2021. Conditional on the company achieving certain levels of its CarbonCount® metric on a quarterly basis, the facility might offer interest rate reductions.

However, the note offering increases the company’s long-term debt obligation. As of Mar 31, 2021, carrying value of its senior unsecured notes was around $1.3 billion.

Shares of this Zacks Rank #4 (Sell) company have declined 1.7% over the past three months against the industry's growth of 4.7%.

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You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Markedly, in recent times a number of REITs have been tapping the debt market to benefit from the low-interest rate environment and strengthen liquidity.

Crown Castle International Corp. (CCI - Free Report) recently announced a public offering of 2.500% senior notes due 2031 for aggregate principal amount of $750 million.The net proceeds are anticipated to be around $739 million and will be used to repay outstanding indebtedness.

Apollo Commercial Real Estate Finance, Inc. (ARI - Free Report) prepared a private offering of $500 million in aggregate principal amount of 4.625% senior secured notes due 2029. Net proceeds from the offering will be utilized for general corporate purposes, including the repayment of borrowings under the company's repurchase agreements.

Earlier this month Ladder Capital Corp (LADR - Free Report) increased the size of a private offering of 4.750% senior notes due 2029 by $250 million to $650 million. The company intends to use funds for general corporate needs including financing pipeline of new loans, core business line investments and repayments of indebtedness.

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