Hudson Pacific Properties, Inc.
) is raising capital to fund its recently announced purchase deal
of Seattle's Merrill Place property. The company, in particular,
has made a public offering of 8.25 million shares at $21.50 per
share and granted the underwriters a 30-day option to buy up to
an additional 1.24 million shares. The offering is expected to
close on Jan 28, 2014.
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Hudson Pacific projects to reap $170.3 million in net proceeds
($195.8 million if the underwriters exercise their option
completely). With the amount generated, the company plans to
finance the buyout of Merrill Place, use it for its development
and redevelopment moves, other acquisitions as well as for
meeting general corporate needs. Till it undertakes these moves,
the company plans to use it for lowering its debt under its
senior unsecured revolving credit facility.
Notably, Hudson Pacific recently penned a deal to acquire the
Merrill Place property in downtown Seattle's Pioneer Square
submarket. It is an office and retail property that would be
purchased from a joint venture for approximately $57.7 million.
The acquisition is slated to complete in Feb 2014, subject to
customary closing conditions. This property comprises around
179,000 square feet of office and ground floor retail, as well as
a 147-stall standalone parking arrangement. Hudson Pacific plans
for an exclusive repositioning of the property and deliver the
new office building by 2017. It is currently 93% leased and 52%
of the leases are slated to end over the next four years.
The capital infusion is a strategic fit as it would help Hudson
Pacific increase its financial flexibility and aim for
opportunistic acquisitions like that of Merrill Place. This
acquisition would help it expand its growing office portfolio in
Downtown Seattle. Moreover, the debt pay off would lower its
Hudson Pacific currently carries a Zacks Rank #2 (Buy). Investors
interested in the REIT industry may also consider stocks like
Extra Space Storage Inc.
First Industrial Realty Trust Inc.
Healthcare Trust of America, Inc.
). All these stocks carry the same rank as Hudson Pacific.