Duke Realty Corporation (
DRE
)
, a real estate investment trust (REIT), has recently renewed its
existing $850 million unsecured revolving credit facility scheduled
to mature in February 2013 in its concerted effort to strengthen
its liquidity and reduce refinancing risk.
J.P. Morgan Securities LLC, a division of
JPMorgan Chase & Co. (
JPM
),
and Wells Fargo Securities, LLC, part of
Wells Fargo & Company (
WFC
)
were the joint Lead Arrangers and joint Book Runners for the
transaction.
The renewed credit facility is scheduled to mature in December
2015 and has an accordion feature that would enable Duke Realty to
extend the maturity by an additional year subject to the
fulfillment of certain conditions. At the same time, the company
can increase the borrowing capacity of the credit facility by $200
million - $400 million to $1.05 billion - $1.25 billion.
Besides extending the debt maturity and improving the borrowing
capacity of the company, the renewed credit facility reduces
capital outflow with a significantly low interest rate. The new
credit facility bears an interest at LIBOR plus 125 basis points,
while that of the erstwhile credit facility was LIBOR plus 275
basis points.
The renewed credit line provides greater financial flexibility
to Duke Realty and increases its liquidity for potential
acquisitions and development opportunities in core markets. Duke
Realty is currently repositioning its portfolio and has exited
certain markets in an attempt to concentrate in areas where it
already has a strong presence.
The company has temporarily closed its operations in some of its
newest markets including Austin, San Antonio, Seattle, and Newport
Beach. The portfolio repositioning is likely to improve the
internal growth metrics, enabling the company to emerge stronger
once the real estate markets fully recover.
Duke Realty is one of the largest commercial real estate
companies in the U.S. For over 35 years, the company has leveraged
its local presence and its integrated platform to drive returns,
and has established itself as a premier publicly traded real estate
developer in the country.
We maintain our long-term 'Neutral' recommendation for Duke
Realty, which currently retains a Zacks #3 Rank that translates
into a short-term 'Hold' rating.
DUKE REALTY CP (
DRE
): Free Stock Analysis Report
JPMORGAN CHASE (
JPM
): Free Stock Analysis Report
WELLS FARGO-NEW (
WFC
): Free Stock Analysis Report
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