U.S. Markets open in 8 hrs 20 mins

Hannon Armstrong (HASI) to Fund Green Projects With Debt Capital

  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
·3 min read
In this article:
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.

Hannon Armstrong Sustainable Infrastructure Capital, Inc. HASI recently upsized its previously-announced private senior unsecured notes offering from $750 million to $1 billion in aggregate principal amount due in 2026.

The notes have been issued as senior unsecured obligations and carry a coupon rate of 3.375%. The offering is anticipated to close on Jun 28, 2021, subject to customary closing norms.

The company plans to utilize the net proceeds of this offering to redeem 5.250% senior notes maturing in 2024, which are green bonds. Following this allocation, incremental net proceeds will be used to acquire or refinance, eligible green projects.

Nonetheless, before the full investment of such net proceeds, Hanon Armstrong plans to invest capital in interest-bearing accounts and short-term, interest-bearing securities. This is in line with the company's intention to continue to qualify as a REIT for taxation purposes.

Notably, its efforts to strengthen its near-term liquidity in these testing times and opportunistically tap the debt market amid the current low-interest-rate environment are strategic fits. In fact, as of the first-quarter 2021 end, the company had $232 million in cash.

Also, since the new notes will carry a coupon rate lower than the green bonds that will be redeemed, the offering is likely to result in notable interest expense savings.

Moreover, in April, the company established a sustainability-linked unsecured revolving credit facility, which enhanced its liquidity. Specifically, it closed a $400-million senior unsecured sustainability-linked revolving credit facility that replaced the prior $50-million senior unsecured revolving credit facility established in first-quarter 2021. Conditional on the company achieving certain levels of its CarbonCount® metric on a quarterly basis, the facility might offer interest rate reductions.

However, the note offering increases the company’s long-term debt obligation. As of Mar 31, 2021, carrying value of its senior unsecured notes was around $1.3 billion.

Shares of this Zacks Rank #4 (Sell) company have declined 1.7% over the past three months against the industry's growth of 4.7%.

Zacks Investment Research
Zacks Investment Research

Image Source: Zacks Investment Research

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Markedly, in recent times a number of REITs have been tapping the debt market to benefit from the low-interest rate environment and strengthen liquidity.

Crown Castle International Corp. CCI recently announced a public offering of 2.500% senior notes due 2031 for aggregate principal amount of $750 million.The net proceeds are anticipated to be around $739 million and will be used to repay outstanding indebtedness.

Apollo Commercial Real Estate Finance, Inc. ARI prepared a private offering of $500 million in aggregate principal amount of 4.625% senior secured notes due 2029. Net proceeds from the offering will be utilized for general corporate purposes, including the repayment of borrowings under the company's repurchase agreements.

Earlier this month Ladder Capital Corp LADR increased the size of a private offering of 4.750% senior notes due 2029 by $250 million to $650 million. The company intends to use funds for general corporate needs including financing pipeline of new loans, core business line investments and repayments of indebtedness.

Zacks' Top Picks to Cash in on Artificial Intelligence

In 2021, this world-changing technology is projected to generate $327.5 billion in revenue. Now Shark Tank star and billionaire investor Mark Cuban says AI will create "the world's first trillionaires." Zacks' urgent special report reveals 3 AI picks investors need to know about today.

See 3 Artificial Intelligence Stocks With Extreme Upside Potential>>


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

Crown Castle International Corporation (CCI) : Free Stock Analysis Report

Apollo Commercial Real Estate Finance (ARI) : Free Stock Analysis Report

Ladder Capital Corp (LADR) : Free Stock Analysis Report

Hannon Armstrong Sustainable Infrastructure Capital, Inc. (HASI) : Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research