Specialty real estate investment trust (REIT) -
) recently issued $275 million 5.25% senior unsecured notes due
2023, which have been assigned a 'BBB-' credit rating by Fitch
Priced at 99.546% of par to yield 5.308% to maturity or 312.5
basis points over the benchmark rate, the notes issuance would
help the company generate capital for paying off its outstanding
As a matter of fact, EPR currently enjoys Issuer Default Rating
(IDR) 'BBB-' with a "Stable" outlook. The rating view is backed
by EPR's steady cash flows from its triple-net leased megaplex
movie theatres as well as other investments in the Entertainment,
Education and Recreation sectors. This has aided the company to
generate favorable leverage and coverage metrics. Moreover, EPR
enjoys solid rent coverage across its portfolio.
However, tenant concentration and its investments in asset
classes that could be less liquid or financeable during any
future period of financial crisis remain the rating agency's
Notably, some of EPR's subsidiaries will guarantee the senior
notes. J.P. Morgan Securities LLC of
JPMorgan Chase & Co.
), Citigroup Global Markets Inc. of
) and RBC Capital Markets, LLC served as joint book-running
managers for the notes offering.
The notes offering would help the company attain financial
flexibility and poise it well to pursue investment opportunities
and acquisitions, which will go a long way in enhancing its top
line. We also believe that the rating outlook well justifies the
creditworthiness of the company.
According to Fitch Ratings - Definitions of Ratings and Other
Forms of Opinion - May 2013, IDR of 'BBB' indicates that
expectations of default risk are currently low. Usually, ratings
of "BBB-" and higher are considered secure and a better rating
boosts investors' confidence in the stock.
EPR has interests in assets in select market segments, with
Entertainment, Recreation and Education being the primary ones.
Its investment in these segments totals over $3.2 billion.
Currently, EPR carries a Zacks Rank #3 (Hold). The other well
performing REIT includes
Acadia Realty Trust
), which has a Zacks Rank #2 (Buy).
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