Healthcare Realty Taps Debt Market With $300M Notes Offering

Healthcare Realty Trust Incorporated HR has tapped the debt market with a senior unsecured notes public offering with the principal amount of $300 million. The notes are priced at 99.189% of the principal amount and will likely raise net proceeds of $294.8 million.

The 2.05% senior unsecured notes are due in March 2031. The securities will yield 2.137% to maturity. Subject to customary closing norms, the offering is anticipated to close on Oct 2, 2020.

The company intends to allocate the net proceeds from the offering to redeem all of its outstanding 3.75% senior notes due 2023. Moreover, it expects funds to be used for other general corporate needs, including payments of the outstanding amount under its unsecured credit facility due 2023, its unsecured term loans due 2024 and 2026, and/or other mortgage notes payable.

In relation to its early extinguishment of the notes, Healthcare Realty Trust estimates a charge of $21.5 million in the fourth quarter. This includes $1.1 million of unamortized costs and discounts.

Notably, the company’s efforts to strengthen its liquidity in these testing times and tap the debt market amid a low interest-rate environment are strategic fits. Moreover, through the offering, the company can access to debt at a cheaper rate of 2.05% instead of 3.75% of the notes that will be redeemed.

Moreover, as of Jun 30, it had cash of $43.7 million and $700 million available on its revolver. Also, Healthcare Realty Trust’s financial policy approach underlines a disciplined debt and equity funding strategy.

In fact, the utilization of its at-the-market (ATM) equity program in the second quarter (for 1.1 million shares that generated $32.9 million in net proceeds) along with the notes offering indicates this consistent capital-sourcing policy.

However, the notes offering increases the company’s long-term financial obligation.

It carries a Zacks Rank of 3 (Hold) at present. Shares of the company have lost 14.1% compared with the industry’s decline of 10.1% over the past year.


Stocks to Consider

Alpine Income Property Trust, Inc.’s PINE funds from operations (FFO) per share estimates for 2020 have been revised 4.4% upward to $1.18 over the past month. It currently sports a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Duke Realty Corporation’s DRE Zacks Consensus Estimate for 2020 FFO per share has been revised 3.5% upward to $1.49 over the past two months. The company currently carries a Zacks Rank of 2.

Sabra Healthcare REIT, Inc.’s SBRA FFO per share estimates for the ongoing year have been revised 1.2% upward to $1.74 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.

Zacks’ Single Best Pick to Double

From thousands of stocks, 5 Zacks experts each picked their favorite to gain +100% or more in months to come. From those 5, Zacks Director of Research, Sheraz Mian hand-picks one to have the most explosive upside of all.

With users in 180 countries and soaring revenues, it’s set to thrive on remote working long after the pandemic ends. No wonder it recently offered a stunning $600 million stock buy-back plan.

The sky’s the limit for this emerging tech giant. And the earlier you get in, the greater your potential gain.

Click Here, See It Free >>

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
Healthcare Realty Trust Incorporated (HR): Free Stock Analysis Report
Duke Realty Corporation (DRE): Free Stock Analysis Report
Sabra Healthcare REIT, Inc. (SBRA): Free Stock Analysis Report
Alpine Income Property Trust, Inc. (PINE): Free Stock Analysis Report
To read this article on click here.
Zacks Investment Research

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

More Related Articles

Info icon

This data feed is not available at this time.

Sign up for Smart Investing to get the latest news, strategies and tips to help you invest smarter.