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Lexington (LXP) to Offer $400M Senior Notes, To Repay Debt
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Lexington Realty Trust (LXP - Free Report) has tapped the debt market with a senior unsecured notes offering. The company priced $400 million in principal amount of notes at 99.758% of the aggregate principal amount. The notes carry a coupon rate of 2.402% and are set to mature in October 2031.
Beginning Apr 1, 2022, the company will pay interest on the notes semi-annually. Conditional on the satisfaction of customary closing norms, the offering is expected to close on Aug 30, 2021.
Net proceeds from the offering will be used to repay all amounts outstanding under its unsecured revolving credit facility. Following the allocation referenced above, any remaining net proceeds will be used to redeem all or part of the company’s outstanding 4.25% senior notes due 2023 and for other general corporate needs, including acquisition opportunities.
Lexington’s efforts to strengthen its near-term liquidity in these testing times and tap the debt market amid the current low-interest-rate environment are strategic fits. By repaying the outstanding amount under the credit facility will increase availability, thereby, enhancing Lexington’s financial flexibility.
As of Aug 5, Lexington had $215 million outstanding under its unsecured revolving credit facility and $385 million availability remaining.
The notes will yield 2.402%, which is significantly lower than the 4.25% interest rate of the notes that will be redeemed. Hence, this will likely result in lower interest expenses. The offering of the long-term notes to repay the debt, which is set to mature in 2023, will extend the average maturity term of debt for the company.
However, the notes offering increases Lexington’s long-term debt obligation. The company ended the second quarter with net debt to Adjusted EBITDA of 4.9X.
The stock has gained 10.6% over the past three months compared with the industry’s growth of 9.6%.
Image Source: Zacks Investment Research
Similar Moves by Other Finance Companies
Gladstone Investment Corporation (GAIN - Free Report) recently priced a public offering of notes worth $117 million in aggregate principal amount. The notes, which are set to mature on Nov 1, 2028, will carry an interest of 4.875%.
In August 2021, Franklin Resources, Inc. (BEN - Free Report) priced a public offering of two series of notes, aggregating $450 million in principal amount. This includes all or part of its $300-million, 2.800% notes due 2022 along with $250 million of Legg Mason’s 3.950% senior notes maturing in 2024.
In the same month, Huntington Bancshares Incorporated (HBAN - Free Report) resorted to a private offering of unsecured subordinated notes. The company priced $500 million in principal amount of fixed-to-fixed rate notes at 100% of the aggregate principal amount. The notes carry a coupon rate of 2.487% and are set to mature in 2036.
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Lexington (LXP) to Offer $400M Senior Notes, To Repay Debt
Lexington Realty Trust (LXP - Free Report) has tapped the debt market with a senior unsecured notes offering. The company priced $400 million in principal amount of notes at 99.758% of the aggregate principal amount. The notes carry a coupon rate of 2.402% and are set to mature in October 2031.
Beginning Apr 1, 2022, the company will pay interest on the notes semi-annually. Conditional on the satisfaction of customary closing norms, the offering is expected to close on Aug 30, 2021.
Net proceeds from the offering will be used to repay all amounts outstanding under its unsecured revolving credit facility. Following the allocation referenced above, any remaining net proceeds will be used to redeem all or part of the company’s outstanding 4.25% senior notes due 2023 and for other general corporate needs, including acquisition opportunities.
Lexington’s efforts to strengthen its near-term liquidity in these testing times and tap the debt market amid the current low-interest-rate environment are strategic fits. By repaying the outstanding amount under the credit facility will increase availability, thereby, enhancing Lexington’s financial flexibility.
As of Aug 5, Lexington had $215 million outstanding under its unsecured revolving credit facility and $385 million availability remaining.
The notes will yield 2.402%, which is significantly lower than the 4.25% interest rate of the notes that will be redeemed. Hence, this will likely result in lower interest expenses. The offering of the long-term notes to repay the debt, which is set to mature in 2023, will extend the average maturity term of debt for the company.
However, the notes offering increases Lexington’s long-term debt obligation. The company ended the second quarter with net debt to Adjusted EBITDA of 4.9X.
Currently, Lexington carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The stock has gained 10.6% over the past three months compared with the industry’s growth of 9.6%.
Image Source: Zacks Investment Research
Similar Moves by Other Finance Companies
Gladstone Investment Corporation (GAIN - Free Report) recently priced a public offering of notes worth $117 million in aggregate principal amount. The notes, which are set to mature on Nov 1, 2028, will carry an interest of 4.875%.
In August 2021, Franklin Resources, Inc. (BEN - Free Report) priced a public offering of two series of notes, aggregating $450 million in principal amount. This includes all or part of its $300-million, 2.800% notes due 2022 along with $250 million of Legg Mason’s 3.950% senior notes maturing in 2024.
In the same month, Huntington Bancshares Incorporated (HBAN - Free Report) resorted to a private offering of unsecured subordinated notes. The company priced $500 million in principal amount of fixed-to-fixed rate notes at 100% of the aggregate principal amount. The notes carry a coupon rate of 2.487% and are set to mature in 2036.