ARE Prices Notes to Lessen Debt - Analyst Blog

By Zacks Equity Research,

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In order to reduce the debt level and boost liquidity position, Alexandria Real Estate Equities, Inc. ( ARE ) priced a public offering of $500 million worth of 3.900% Senior Notes at 99.712% of the principal amount. The transaction will likely be completed by Jun 7, subject to customary closing conditions. 

The notes, which are scheduled to mature in 2023, contain a yield to maturity of 3.935%.  Notably, the notes will be entirely and unconditionally guaranteed by a wholly owned ancillary of the company - Alexandria Real Estate Equities, L.P.

In particular, Alexandria Real Estate plans to utilize the fund generated from the offering to pay off in advance $150 million of the $750 million worth outstanding unsecured senior bank term loan, due 2016. This will shrink the Alexandria Real Estate's outstanding debt under the unsecured senior credit line to zero. Moreover, the company expects to use the remaining amount for investment in planned developments and redevelopments, proposed acquisitions as well as for meeting other corporate needs.

A consortium of banking giants - such as J.P. Morgan Securities LLC of J.P. Morgan Chase & Co. ( JPM ), Barclays Capital Inc., Goldman, Sachs & Co. of The Goldman Sachs Group, Inc. ( GS ) and PNC Capital Markets LLC of The PNC Financial Services Group, Inc. ( PNC ) - acted as the joint book-running managers for the company's notes offering.

As of Mar 31, 2013, Alexandria Real Estate had cash and cash equivalents worth $87.0 million, up from $77.4 million as of Mar 31, 2012. The move will help the company to lower its debt and reduce interest expenses. Moreover, increased financial flexibility will position the company well to pursue investment opportunities and acquisitions, which will go a long way in enhancing its top-line growth.

Lately, the company has been dedicated toward reducing its outstanding debt level under its unsecured senior line of credit. In connection to this, earlier this month, the company sold a total of 7.6 million common shares at $73.50 per share and obtained net proceeds of about $535.5 million (excluding payment of underwriting discounts and commissions).

Currently, Alexandria Real Estate carries a Zacks Rank #3 (Hold).

ALEXANDRIA REAL (ARE): Free Stock Analysis Report

GOLDMAN SACHS (GS): Free Stock Analysis Report

JPMORGAN CHASE (JPM): Free Stock Analysis Report

PNC FINL SVC CP (PNC): Free Stock Analysis Report

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Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , Business , Stocks
Referenced Stocks: ARE , GS , JPM , PNC

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