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First Industrial Boosts Flexibility With Loan Refinancing

First Industrial Realty Trust, Inc. FR entered a new unsecured term-loan facility to refinance a $200-million unsecured term-loan facility.

With this, the company extended the loan maturity from Jan 29, 2021, to Jul 15, 2021. Further, the new loan offers optional maturity rollover, with two one-year extension options. Moreover, the refinanced loan is an interest-only debt obligation and carries an interest rate of LIBOR plus 150 basis points.  

In a bid to gain exposure to fixed interest rate, the company simultaneously entered interest rate swap agreements. It will pay a fixed interest rate of 2.49% starting from February 2021 for this swap.

Management believes that the transaction will extend the company’s debt maturities and boost its financial flexibility post the pandemic.

Amid the continuing unprecedented times, when business operations and rent collections remain uncertain, liquidity has become a focal point within the REIT industry. Hence, with the unsecured debt market being open with significant demand, many companies have procured debt capital to refinance near-term loans and boost liquidity.

Moreover, the e-commerce boom and supply-chain strategy transformations have driven strong demand for industrial real estate. In light of the coronavirus pandemic, warehouse operations have become more essential with increased e-commerce customers. Over the long term, apart from the fast adoption of e-commerce, the logistics real estate is expected to benefit from the likely increase in inventory levels post crisis. This will open up prospects for industrial REITs.

However, the pandemic’s adverse impact on the economy will likely thwart the demand for space in the near term. Rent relief and deferrals are added concerns.

Shares of this Zacks Rank #2 (Buy) company have rallied 3.5% over the past year against the industry’s decline of 7.7%.

 

 

Other Stocks to Consider

City Office REIT, Inc. CIO funds from operations (“FFO”) per share estimates for the ongoing year have been unchanged at $1.11 over the past 30 days. The company currently carries a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Alexandria Real Estate Equities, Inc.’s ARE FFO per share estimates for 2020 have been revised marginally upward to $7.32 over the past week. It currently carries a Zacks Rank of 2.

Cousins Properties Incorporated’s CUZ Zacks Consensus Estimate for 2020 FFO per share has been revised marginally upward to $2.74 over the past month. The company currently carries a Zacks Rank of 2.

Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.

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