DDR Unveils $1.2B in Refinancing - Analyst Blog
19 January 2013 - 4:29AM
Zacks
DDR Corp. (DDR), a real estate investment trust
(REIT), has acquired funds worth $1.2 billion for refinancing its
debt. The move will help the company lower its cost of capital as
well as extend the maturities.
DDR, in particular, has obtained a new $750 million unsecured
revolving credit facility as well as a $400 million term loan, both
of which will mature in 2017. With this, the company refinanced two
of its senior unsecured revolving credit facilities scheduled to
mature in February 2016 and its senior secured term loan due in
September 2014.
The $750 million revolving credit facility, arranged by
JPMorgan Chase & Co. (JPM) and Wells
Fargo & Co. (WFC), may be increased to $1.25 billion.
The company also refinanced its $65 million unsecured revolving
credit facility that was offered by PNC Bank of the PNC Financial
Group Inc. (PNC) on similar terms.
In addition to the extension of the maturities, DDR can benefit
from cheaper rates of the current facilities. Both the revolving
credit lines currently bear interest rate of LIBOR plus 140 basis
points (bps), reflecting a decrease of 25 bps from the prior
rate.
Moreover, the annual facility fee for both revolving credit
lines has been lowered to 30 bps from 35 bps. Also, the new term
loan’s interest rate is currently set at LIBOR plus 155 bps,
resulting in a decline of 15 bps from the prior rate.
Thus, the move is a strategic fit and provides DDR adequate
financial flexibility. Moreover, the company has a well-diversified
portfolio concentrated mostly in the high growth areas of the
country, including Florida, California, Texas and North Carolina.
With a focus on best-in-class retailers in strategic locations, the
portfolio drives value and mitigates operating risks by generating
a relatively steady revenue stream.
DDR is scheduled to release its fourth-quarter 2012 results on Feb
12, 2013. The Zacks Consensus Estimate for the fourth-quarter FFO
(fund from operations) is currently pegged at 27 cents per
share.
DDR currently holds a Zacks Rank #4 (Sell). However, we maintain
our long-term Neutral recommendation on the stock.
Note: FFO, a widely accepted and reported measure of the
performance of REITs is derived by adding depreciation,
amortization and other non-cash expenses to net income.
DDR CORP (DDR): Free Stock Analysis Report
JPMORGAN CHASE (JPM): Free Stock Analysis Report
WELLS FARGO-NEW (WFC): Free Stock Analysis Report
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