Healthcare Realty Trust Inc.
), a real estate investment trust (REIT), recently disclosed the
pricing of senior unsecured notes worth $250 million. The 3.75%
senior unsecured notes, which are due 2023, were priced at
99.179% of the principal amount. This capital infusion move is
expected to auger well for the company's financial flexibility,
repay debt and meet near-term obligations.
Particularly, the proceeds generated from this notes offering,
Healthcare Realty plans to finance the redemption of its 5.125%
senior unsecured notes maturing Apr 1, 2014. In this connection,
the company has already made an announcement regarding its
intention to redeem the notes on Apr 18, 2013 at a redemption
price equal to an aggregate of $277.3 million. Healthcare Realty
anticipates recording a one-time charge of approximately $12.3
million in the second-quarter of 2013 for early extinguishment of
In addition to financing the notes redemption, Healthcare Realty
plans to use funds generated for reducing its borrowings under
its unsecured credit facility due Apr 14, 2017 and meet general
For the notes offering, which is expected to close on Mar 26,
2013, J.P. Morgan Securities LLC - a unit of
JPMorgan Chase & Co.
), Wells Fargo Securities LLC of
Wells Fargo & Company
), and Credit Agricole Securities (USA) Inc. served as Joint
Book-Running Managers. A number of companies acted as Senior
Co-Managers while U.S. Bancorp Investments Inc. of
) and a host of other firms served as Co-Managers for the
Notably, as of Dec 31, 2012, Healthcare Realty had $6.8 million
of cash and cash equivalents. Subsequent to the quarter-end, the
company sold 1.6 million of common shares under its at-the-market
equity offering program ('ATM') for roughly $39.7 million. The
net proceeds were utilized for funding its acquisitions.
Going forward, we believe that Healthcare Realty is
well-positioned with a low risk, highly stable portfolio of
physician-oriented medical office buildings as well as clinical
and surgical outpatient real estate properties.
Also, the company has almost completed the strategic shift away
from a single-tenant/Master Lease model to a multi-tenant
operating model, thereby reducing concentration risk and
augmenting its probability. This along with the company's ongoing
opportunistic acquisitions, are expected to provide significant
upside potential to the stock going forward.
The capital infusion moves are a strategic fit as they help
increase Healthcare Realty's flexibility and position it
favorably to pursue investment opportunities and acquisitions,
which will go a long way in enhancing its top-line growth.
Healthcare Realty currently holds a Zacks Rank #3 (Hold).
HEALTHCARE RLTY (HR): Free Stock Analysis
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