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Agree Realty Expands Credit Facility, Fortifies Balance Sheet

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Agree Realty Corporation (ADC - Free Report) recently fortified its balance sheet by amending and restating the company’s revolving credit and term loan agreement to increase the senior unsecured credit facility to $600 million.  The move will also enable the company to extend the maturity of the revolving facility.

The credit facility comprises a $500-million unsecured revolving line of credit due in January 2024 that can be extended by a year by exercising an option. The credit facility also consists of two unsecured term loans worth $65 million and $35 million, respectively.  It will mature in January 2024. There is also an accordion option in the credit agreement for increasing the credit facility capacity by up to a total of $1.1 billion.

For the revolving line of credit, pricing will range from an interest rate of LIBOR + 77.5 to 145 basis points (bps). For the term loan, pricing will range from an interest rate of LIBOR + 85 to 165 bps. Both ranges will depend on the company's credit rating.

Based on the company's leverage ratio and credit rating at the time of closing, the revolving facility was priced at LIBOR+ 82.5 bps, while interest rate on unsecured term loans was 3.13%. Agree Realty intends to utilize existing interest rate swaps to fix LIBOR on the term loans at around 2.13%.

The credit facility expansion is a strategic fit as it provides ample growth opportunities. Moreover, extended maturities of the assumed debt will help improve its maturity profile and enjoy greater liquidity for day-to-day operations. The recast will also enable the company to make accretive investments in high-quality retail net lease properties.

Recently, the company also announced a 2.6% sequential hike in quarterly cash dividend. It will now pay a dividend of 58.50 cents per share, up from the 57 cents paid in the prior quarter. The increased dividend will be paid on Jan 3, 2020, to shareholders of record as on Dec 20, 2019.

In the past six months, shares of this Zacks Rank #2 (Buy) company have gained 7.8% compared with the industry’s rally of 3.1%. You can see the complete list of today’s Zacks #1 Rank stocks here.


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