Duke Realty (DRE) to Procure Capital With $450M Notes Offering
Duke Realty Corporation DRE has priced a public offering of $450 million of senior unsecured notes through its operating partnership, Duke Realty Limited Partnership. The 1.75% senior unsecured notes have been priced at 99.252% of their face amount and will yield 1.832% to investors at maturity. It is scheduled to mature on Feb 1, 2031.
The offering is anticipated to close on Jan 21, 2021, conditioned on the customary closing norms.
The operating partnership plans to use the net proceeds from the offering to partly or wholly finance or refinance recently completed or future “Eligible Green Projects”. These projects include “green buildings,” sustainable water and wastewater management systems, energy efficiency projects, renewable energy projects, pollution prevention and control, and clean transportation solutions.
Notably, the notes offering will enable Duke Realty to procure project financing without straining its liquidity position. Particularly, the company ended third-quarter 2020 with $1.2 billion of liquidity. Moreover, it maintains a high unencumbered asset pool, with 98% of unencumbered assets in its portfolio. It has no significant debt maturities until 2023 and its leverage metrics remain conservative with debt-to-EBITDA on a trailing 12-month basis at 5 times, consistent with the midpoint of its guidance.
Finally, the company enjoys investment-grade credit ratings of BBB+ and Baa1 from Standard & Poor’s and Moody’s, respectively. This allows it to borrow at an advantageous rate. Given its balance-sheet strength and prudent financial management, the company is well-poised to bank on growth opportunities.
These growth opportunities are spurring from a significant increase in e-commerce’s share of total retail sales and a likely rise in the inventory levels of companies as a precaution for any supply-chain disruption. This is driving the demand for warehouse and distribution spaces and will likely keep supporting industrial landlords’ leasing activities.
In fact, Duke Realty inked a lease renewal for its Woodlake 100 facility at 100 Innovation Avenue situated in Morrisville, NC. The tenant — a global commercial printing company — will continue to rent out 45,000 sq ft at Duke Realty’s 108,000-square-foot building in Woodlake Center.
With this lease renewal, Woodlake Center will remain fully-occupied over the next several years.
Shares of this Zacks Rank #3 (Hold) company have gained 8.4% over the past year as against the industry's decline of 7.7%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Other than Duke Realty, a number of REITs have recently tapped the debt market with notes offering to benefit from the low interest rates. These include Lamar Advertising Company LAMR, Digital Realty Trust, Inc. DLR and OUTFRONT Media OUT.
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Duke Realty Corporation (DRE) : Free Stock Analysis Report
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