Recently,
Duke Realty Corp.
(
DRE
) unveiled the offering of $250 million in senior unsecured
notes. It was made through its operating partnership - Duke
Realty Limited Partnership.
The offering, which is expected to close on Mar 15, 2013, will
help Duke Realty generate proceeds that will help increase its
financial flexibility and meet near-term obligations.
Specifically, Duke Realty priced the offering of $250 million of
its 3.625% senior unsecured notes, due Apr 15, 2023, at 99.179%
of their face amount to yield 3.723% to maturity.
Duke Realty plans to utilize the proceeds for repaying its debt
that has near-term maturities. This will include either whole or
part of its borrowings that remain outstanding under its existing
revolving credit facility. Funds may also be used for meeting
other general corporate needs.
A number of companies have taken part in this offering. Barclays
Capital Inc., J.P. Morgan Securities LLC of
JPMorgan Chase & Co.
(
JPM
), RBC Capital Markets, LLC and Wells Fargo Securities LLC of
Wells Fargo & Company
(
WFC
), acted as joint book-running managers. Moreover, U.S. Bancorp
Investments Inc. of
U.S. Bancorp
(
USB
) along with a host of other companies acted as co-managers.
In Conclusion
In January, Duke Realty reported its fourth quarter 2012 core FFO
of 27 cents per share, in line with the Zacks Consensus Estimate
but 3 cents down from the prior-year quarter, reflecting lower
third party construction fees and short-term dilution effect
arising out of the repositioning moves.
During 2012, the company generated net proceeds of $315 million
from an at-the-market (ATM) equity program, refinanced $600
million in unsecured debt and redeemed 6.95% Series M Preferred
Shares worth $168 million. At the end of fourth quarter 2012,
Duke Realty had nearly $34 million in cash.
Furthermore, in Jan 2013, the company raised net proceeds of $572
million from a 41.4 million common equity offering to help lower
its leverage and improve coverage ratios.
We believe that the short-term revenue headwinds will limit the
stock's upside potential to some extent. Nevertheless, Duke
Realty's strong leasing activity, strategic efforts to reposition
its portfolio, focus on maintaining a balanced and flexible
balance sheet with ample liquidity would enable it to operate
efficiently, tide over the near term constraints and capitalize
on potential acquisition opportunities.
Duke Realty currently retains a Zacks Rank #3 (Hold).
DUKE REALTY CP (DRE): Free Stock Analysis
Report
JPMORGAN CHASE (JPM): Free Stock Analysis
Report
US BANCORP (USB): Free Stock Analysis Report
WELLS FARGO-NEW (WFC): Free Stock Analysis
Report
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