In order to strengthen its liquidity position and pay back
Federal Realty Investment Trust
) closed the equity offering of 2.75% senior unsecured notes
worth $275 million, maturing on Jun 1, 2023.
This real estate investment trust (REIT), in particular,
intends to use the net proceeds to pay off its outstanding debt,
redeem notes and for other corporate purposes.
The new senior notes were offered at 98.749% of the principal
amount and carried a yield to maturity rate of 2.894%.
Starting Dec 1, 2013, the interest on the notes will be payable
on Jun 1 and Dec 1 of each year.
A consortium of banking giants supported Federal Realty in the
offering. Wells Fargo Securities of
Wells Fargo & Company
) and Merrill Lynch, Pierce, Fenner & Smith Incorporated of
Bank of America Corporation
) acted as joint book-running managers for the offering. On
the other hand, Deutsche Bank Securities Inc., PNC Capital
Markets LLC, and U.S. Bancorp Investments, Inc. of
) acted as joint lead managers. As a matter of fact, these
$275 million senior unsecured notes of Federal Realty's have been
rated 'A-' by Fitch Ratings.
Federal Realty owns Class A shopping centers in high-income
areas of the country, with a concentration of assets in
Washington D.C., Boston, Philadelphia, and Calif. Additionally,
the company generally signs long-term leases with annual bumps;
which is a good hedge against inflation. Such moves are expected
to provide Federal Realty considerable upside potential and will
boost its top-line growth going forward.
Federal Realty has one of the strongest balance sheets in the
sector. As of Mar 31, 2013, the company had cash and cash
equivalents of approximately $31.3 million, compared to $37.0
million as of Dec 31, 2012. Moreover, since its inception in
1962, Federal Realty has the unique reputation of increasing its
dividend consecutively for 45 years - the longest in the REIT
Currently, Federal Realty retains a Zacks Rank #3 (Hold).
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