Retail real estate investment trust (:REIT), Regency Centers Corporation (REG) recently disclosed the amendment of its unsecured term loan facility. The move would give the company greater financial flexibility and enhance its liquidity.
Specifically, with this amendment, Regency can enjoy a new facility size of $165 million, maturity date extension to Jun 27, 2019 and most importantly a reduction in the applicable interest rate.
Syndicated to a consortium of 10 banks including Wells Fargo Bank (WFC) and Regions Financial Corporation (RF), this facility bears interest at LIBOR plus 1.15% per annum and has to undergo an unused fee of 0.20% per annum on the balance undrawn. Notably, as of Jun 30, 2014, borrowings under the facility totaled $75 million. The company can choose to borrow up to an additional $90 million until Aug 31, 2015.
The enhanced liquidity will likely be spent on general corporate needs as well as development and redevelopment measures. It also plans to exercise this flexibility on its maturing debt payback obligations.
Hence, we believe that this facility amendment is a strategic fit as the company can now enjoy not only time extension and enhanced size but also meet its growth needs and debt obligations efficiently. Also, this reflects the confidence of the banks in this company’s fundamentals. Notably, the company exited first-quarter 2014 with cash and cash equivalents of nearly $44.4 million, down from $90.2 million at the prior-quarter end.
As a matter of fact, Regency is diligently working toward uplifting its properties’ quality to attract more in shoppers. In recent times, the company added ULTA Salon, Cosmetics & Fragrance, Inc. (ULTA) and 18|8 as tenants at 4S Commons Town Center in San Diego, CA, to offer a better salon experience.
Also, Regency announced the redevelopment of a community center – Kings Park Shopping Center – based in Burke, VA to expand the center and enhance the shopping experience (read: Regency Refurbishes VA Asset to Boost Footfall). Such targeted measures are expected to attract greater footfall and drive demand at the properties.
Regency currently carries a Zacks Rank #3 (Hold).