SL Green Realty (SLG - Free Report) announced that it has refinanced its unsecured corporate credit facility in a bid to increase the company’s borrowing capacity by $217 million to $3 billion and stretch the maturities of debts.
Amendments have been made in the funded term-loan component as well as the revolving component of the credit facility. The company upsized the five-year funded term loan component by $117 million to $1.3 billion.The restated loan, slated to mature inMarch 2023,replacesthe previous facility which was slated to mature inJune 2019, and reduces the borrowing cost to 135 basis points (bps) over LIBOR.
The company also revised terms of the revolving line of credit component of the existing facility, which now, including the as-of-right extension options aggregating 1-year, matures in March 2023, as against the previous maturity of March 2019. It also reduced the capacity of the revolver by $100 million to $1.5 billion. The interest rate has also been reduced to LIBOR plus 120 bps.
Further, a new seven-year funded term-loan component has been added to expand the facility by $200 million. It is priced at LIBOR plus 190 bps and expires in November 2024.
Per SL Green’s management, this refinancing activity mirrors the company’s solid financial position and a strong operating platform. In addition, this modification enables the company to advance with its unsecured borrowing strategy and simplify the debt structure. Also, it reflects the favorable lending environment in the New York City real estate market.
The move, which boosts the company's financial flexibility and future investment activities, highlights lenders' confidence in the company. In fact, with this extension of maturity, SL Green has no other unsecured floating rate debt maturities till March 2023. This provides the company ample scope for deploying capital for long-term growth opportunities and carrying out redevelopment initiatives and rewarding capital to stockholders, at the same time.
The company’s shares have underperformed its industry, year to date. During the period, shares of the company have lost 6.2%, while the industry recorded growth of 7.4%.
SL Green currently carries a Zacks Rank #3 (Hold).
Better-ranked stocks in the real estate investment trust space include Clipper Realty (CLPR - Free Report) , Extra Space Storage (EXR - Free Report) and Franklin Street Properties (FSP - Free Report) . All three carry a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Clipper Realty’s 2017 funds from operations (FFO) per share estimates remained unchanged at 38 cents over a month’s time. Year to date, its share price has dipped 24%.
Extra Space Storage’s FFO per share estimates for the current year have moved up to $4.33 in a week’s time. Its shares have gained 10.3%, year to date.
Franklin Street Properties’ FFO per share estimates for 2017 remained unchanged at $1.05 over the past month. Its share price has declined 17%, year to date.
Note: All EPS numbers presented in this write up represent funds from operations (“FFO”) per share. 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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