Realty Income Corporation
), a real estate investment trust, recently announced that it has
entered into a new unsecured acquisition credit facility worth $1.0
billion. The new facility replaces the company's existing $425
million facility and is scheduled to mature on May 10, 2016. The
new credit facility carries an option of extending to the total
commitment up to $500 million.
Wells Fargo and Securities LLC, a subsidiary of
Wells Fargo & Company
), is the sole lead arranger and administrative agent for the
credit facility. While the co-syndication agents are
Bank of America Corp.
), and Regions Bank.
The new credit facility's interest rates are at historically low
levels. The company's good credit rating comes with a borrowing
rate of LIBOR plus 107.5 basis points (bps) along with a facility
commitment fee of 17.5 bps. Additionally, the all-in drawn price
will be 125 bps over LIBOR, which reduced 95 bps from the previous
all-in drawn pricing.
Management intends to utilize the fund for expanding the size of
its real estate portfolio, thereby increasing the shareholders'
value by hiking the dividend.
Following the end of first quarter 2012, Realty Income has
entered into agreements to acquire 250 new properties for
approximately $514 million. The properties will be leased to four
different tenants and will operate in markets included in company's
real estate portfolio. To date, the company has declared 503
consecutive monthly dividend payments.
As of March 31, 2012, Realty Income had $43.0 million of
outstanding debt under company's acquisition credit facility and
cash and cash equivalents of $5.2 million.
As of March 31, 2012, the company owned 2,631 properties in 49
states, leased to 137 retail chains and other commercial business
enterprises operating in 38 countries. Apart from improving the
size and quality of its portfolio through strategic acquisitions of
high-quality properties, the company plans to continue selling
non-core properties that do not fit with its long-term
Realty Income currently retains a Zacks #3 Rank, which
translates into a short-term Hold rating. We are also maintaining
our long-term Neutral recommendation on the stock. One of its
Kimco Realty Corp.
) also holds a Zacks #3 Rank.
BANK OF AMER CP (BAC): Free Stock Analysis
KIMCO REALTY CO (KIM): Free Stock Analysis
REALTY INCOME (O): Free Stock Analysis Report
WELLS FARGO-NEW (WFC): Free Stock Analysis
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