In order to pay off outstanding debt,
AvalonBay Communities Inc.
) is raising capital through notes issuance. The company priced
3.625% unsecured notes worth $400 million at 99.728% of the
principal amount. From the offering, it expects to reap around
$396.2 million, inclusive of estimated issuance costs.
Notably, this apartment real estate investment trust (REIT)
intends to utilize the proceeds to pay off outstanding debt under
its unsecured revolving credit facility worth $1.3 billion. The
remaining amount will likely be used to fulfill other corporate
needs such as acquisition, development and redevelopment of
apartment assets and reducing and refinancing other debts.
The unsecured notes will mature on Oct 1, 2020 and have a
yield to maturity of 3.669%. The interest on the notes will be
paid semi-annually on Apr 1 and Oct 1. The first payment will be
made on Apr 1, 2014. Notably, the settlement is slated to
complete by Sep 20, 2013.
As a matter of fact, Deutsche Bank of
Deutsche Bank AG
) and UBS Investment Bank of
) supported AvalonBay in this offering as lead representatives of
As of Jun 30, 2013, AvalonBay had $142.0 million outstanding
under its $1.3 billion unsecured credit facility. The company had
nearly $205.2 in cash, restricted cash, and cash in escrow as of
We believe that the above-mentioned transaction is strategic
fit as it will lower AvalonBay's debt and thereby interest
expenses as well. Moreover, increased financial flexibility will
enable AvalonBay to pursue strong portfolio restructuring
activity that will go a long way in enhancing top-line
AvalonBay currently carries a Zacks Rank #3 (Hold).
AVALONBAY CMMTY (AVB): Free Stock Analysis
DEUTSCHE BK AG (DB): Free Stock Analysis
MORGAN STANLEY (MS): Free Stock Analysis
UBS AG (UBS): Free Stock Analysis Report
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