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Duke Realty Prices $350M Senior Notes Offering at 99.072%

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Duke Realty Corporation  priced an underwritten public offering of its 1.750% senior unsecured notes, with an aggregate principal amount of $350 million. The notes maturing on Jul 1, 2030, were priced at 99.072%, resulting in a yield to maturity of 1.852%.

Subject to the satisfaction of customary closing norms, the offering is likely to close on Jun 29.

In the near term, net proceeds of the notes offering is likely to be held in cash and cash equivalents. The company expects to use net proceeds from the offering to repurchase its 3.875% senior notes due 2022. Any remaining net proceeds will be utilized for general corporate needs, including the repayment of the outstanding amount on the company’s unsecured senior line of credit.

Duke Realty’s efforts to strengthen its liquidity in these testing times and resort to debt financing amid a low interest-rate environment are a strategic fit. Further, repaying outstanding amount on credit facility will increase availability and boost liquidity.

Notably, Duke Realty enjoys a strong balance sheet, ample liquidity and easy access to capital. In a bid to manage the global uncertainties, resulting from the ongoing crisis, the company borrowed $200 million on its unsecured line of credit in the first quarter. This boosted its cash position, providing ample liquidity to continue its operations uninterrupted, fund dividend payments and finance development pipeline.

Moreover, as of the first-quarter end, the company had $1.2 billion in liquidity, consisting of $188 million of cash in hand and $992 million available under its credit facility. Additionally, it entered a refinance transaction that enabled it to eliminate significant debt maturities until October 2022. Hence, with substantial financial flexibility, the company is well-poised to capitalize on growth opportunities.

However, the notes offering increase the company’s long-term debt.

Moreover, shares of this Zacks Rank #3 (Hold) company have improved 11.4% over the past year against the industry’s decline of 7.3%.

 


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Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.

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