Healthpeak Properties, Inc. PEAK priced a public offering of 2.875% senior unsecured notes at 99.125% of the principal amount. The senior obligation, with an aggregate principal amount of $600 million, will be due in 2031.
Subject to the satisfaction of customary closing norms, the offering is likely to close on Jun 23.
The company plans to use the net proceeds from the offering to fully redeem (including the payment of premiums and accrued interest) its 3.15% senior notes due August 2022 with an aggregate principal amount of $300 million.
Proceeds will also be used to fund the tender offer to cash purchase a portion of its 4.250% senior notes due November 2023.
Remaining net proceeds will be used for general corporate purposes, including the repayment of the outstanding balance under the company’s revolving credit facility and outstanding commercial paper.
Healthpeak’s efforts to strengthen its liquidity in these testing times and tap the debt market amid a low interest-rate environment are a strategic fit.
In fact, the company undertook several liquidity-enhancement initiatives amid the potential disruption related to the COVID-19 pandemic. The efforts bolstered its liquidity to $2.8 billion as of Jun 1, consisting of $2.5 million of borrowing capacity under its unsecured revolving line of credit facility, and $500 million of cash and cash equivalents.
Additionally, as of May 4, the company’s investment-grade balance sheet enjoys long-term credit ratings of Baa1 from Moody’s and BBB+ from Fitch. Its debt profile is well-staggered, with only $17 million of debt maturing in 2020. With impressive credit rating and provision to issue additional securities under its at-the-market program, the company can easily access the debt and equity markets to fund capital commitments. Therefore, Healthpeak, with its sound liquidity position and limited near-term capital needs, is anticipated to sail through the uncertain times.
However, the notes offering increases the company’s long-term debt.
Moreover, shares of this Zacks Rank #3 (Hold) company have declined 6.9% as against the industry’s growth of 0.7%.
Stocks to Consider
Alexander Baldwin Holdings, Inc.’s ALEX Zacks Consensus Estimate for 2020 funds from operations (FFO) per share has been unchanged at 83 cents over the past month. The company currently flaunts a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
One Liberty Properties, Inc.’s OLP FFO per share estimate for the ongoing year has been unchanged at $1.89 over the past 30 days. The company currently flaunts a Zacks Rank of 1.
Gladstone Land Corporation’s LAND FFO per share estimate for 2020 has moved 3% upward to 68 cents over the past month. Further, it currently carries a Zacks Rank of 2 (Buy).
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.
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