Prologis, Inc. (PLD - Free Report) recently fortified its balance-sheet strength by amending and restating the company’s global credit facility, increasing the total capacity from $3 billion to $3.5 billion. Including the company’s Japanese yen facility, its global line of credit amounts to $4 billion.
The amended facility contains an accordion feature that enables Prologis to further expand the credit facility by $1 billion. It is slated to mature on Jan 16, 2023. Also, funds from the facility can be withdrawn in currencies, including U.S. dollars, euros, Japanese yen, British pound sterling, Mexican pesos and Canadian dollars.
This recasting offers a cheaper line of credit to the company, reducing annualized interest expense. Specifically, pricing under the facility has been reduced by 7.5 basis points (bps) and is currently at LIBOR plus 77.5 bps. The pricing also depends on the company's public debt ratings.
Also, the credit line is structured as an ESG-linked facility, with sustainability-linked pricing mechanism that can lower the borrowing spread if specific environmental sustainability benchmarks are achieved every year.
Per management, the amended credit line indicates the company’s strong balance sheet, as well as its commitment to environmental stewardship, social responsibility and governance objectives.
Notably, Prologis has made efforts to bolster its liquidity, and reduce the company’s weighted average interest rate and improve maturity ladder. Moreover, its balance-sheet strength and prudent financial management have improved the company’s borrowing margins.
The recast provides the company ample scope to deploy capital for long-term growth opportunities. Understandably, as the company continues to focus on development of build-to-suit projects, the recast will likely enable it to leverage on improving market fundamentals and make accretive investments at advantageous urban locations.
The company recently reported solidbuild-to-suit activity in the second half of 2018, completing 17 of such projects. These projects included more than 4.4 million square feet of area and involved total expected investment (TEI) of around $400 million on a Prologis-share basis. (Read more: Prologis Announces Encouraging Build-to-Suit Activity)
However, higher supply of industrial real estate space is anticipated to reduce scope for rent and occupancy growth. Additionally, any protectionist trade policies will have an adverse impact on economic growth, as well as the company’s business over the long term.
Shares of this Zacks Rank #3 (Hold) company have inched up 0.9%, outperforming the industry’s decline of 1.8% over the past six months.
Stocks to Consider
Terreno Realty Corporation (TRNO - Free Report) carries a Zacks Rank of 2 (Buy), at present. The company’s funds from operation (FFO) per share estimates for 2018 remained unrevised at $1.32, over the past month. Its shares have rallied 4.9% over the past three months. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
OUTFRONT Media Inc. (OUT - Free Report) carries a Zacks Rank of 2, currently. The company’s FFO per share estimates for 2018 remained unchanged at $2.09 in a month’s time. Its shares have appreciated 11.1% over the past month.
Extra Space Storage Inc (EXR - Free Report) also carries a Zacks Rank of 2. The company’s FFO per share estimates for 2018 remained unchanged at $4.64, in a month’s time. Its shares have gained 6.5% over the past three months.
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