Franklin Street Properties Amends Existing $220M Term Loan

Shutterstock photo

Franklin Street Properties Corp. FSP recently boosted its financial flexibility by amending the company's existing $220-million unsecured term loan with Bank of Montreal BMO .

Although the outstanding principal amount remained unchanged at $220 million, the company allocated $55 million to tranche A term loan, while $165 million has been allocated to tranche B.

In addition, tranche A term loan maturity date has been extended from Aug 26, 2020 to Nov 30, 2021. Similarly, tranche B of the loan will mature on Jan 31, 2024. Also, depending on the company's credit rating, its margin over LIBOR was decreased to a range of 85-165 basis points (bps) as compared to the previous 105-215 bps band. In fact, based on the company's credit rating of Baa3 with Moody's, as of September 27, 2018, its margin over LIBOR improved from 165 bps to 125 bps.

Similarly, the company's margin over base rate shrunk from 5-115 bps to 0-65 bps range. This recasting offers a cheaper line of credit to the company and helps reduce annualized interest expense. The move will also boost the company's cash flow and alleviate its bottom-line pressure.

Moreover, extended maturities of the assumed debt will help improve its maturity profile and enjoy greater liquidity for day-to-day operations. The recast will also enable the company to leverage on improving market fundamentals, and make accretive investments in the company's urban and in-fill office property portfolio.

Notably, with economic improvement and recovery in the job market, we expect healthy growth in demand for office spaces. This is because, as the economy revives, business grows and therefore, corporate sectors seek expansion, renting more space to accommodate the increased workforce. This will significantly be conducive to the performance of REITs, including Franklin Street Properties, Cousin Properties Incorporated CUZ and Hudson Pacific Properties, Inc. HPP , which have notable exposure to office properties.

As for Franklin Street Properties, it can leverage on the tailwind and execute its short- and long-term business plans. In fact, the favorable arrangement provides the company ample scope to deploy capital for long-term growth opportunities.

Looking for Stocks with Skyrocketing Upside?

Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.

Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.

See the pot trades we're targeting>>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Bank Of Montreal (BMO): Free Stock Analysis Report

Cousins Properties Incorporated (CUZ): Free Stock Analysis Report

Hudson Pacific Properties, Inc. (HPP): Free Stock Analysis Report

Franklin Street Properties Corp. (FSP): Free Stock Analysis Report

To read this article on Zacks.com click here.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , Business , Stocks
Referenced Symbols: BMO , CUZ , HPP , FSP

More from Zacks.com




Equity Research

Research Brokers before you trade

Want to trade FX?