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PS Business Parks, Inc. PSB has announced the amendment and restatement of its unsecured revolving credit facility. The company extended its maturities and increased the total principal amount of the unsecured revolving credit facility from $250 million to $400 million. With this, the company enters into the fourth credit agreement. This boosts the company’s financial flexibility.
The amended and restated revolving credit facility is expected to mature on Aug 24, 2025. The maturity of the facility can be prolonged by using two six-month extension options or one 12-month extension option.
Interest rate on the amounts outstanding under the credit facility will be LIBOR plus 0.7%, and includes a facility fee of 10 basis points calculated on the committed principal amount.
The credit facility highlights a sustainability-linked pricing component, in which the pricing can improve 0.01% if the company succeeds to meet certain sustainability performance targets. It also has an accordion feature, which gives the company an option to increase commitments under the credit facility up to an additional amount of $300 million.
The expansion of credit facility amount and maturity extension helps the company enjoy greater flexibility. PS Business Parks exited second-quarter 2021 with cash and cash equivalents of nearly $116 million, up from the $69.1 million reported at the end of 2020. With a decent balance-sheet strength and ample liquidity, it is well poised to withstand any cash-flow woes and seize accretive growth scopes.
However, rising supply in several markets is expected to intensify competition and curb pricing power.
Shares of this Zacks Rank #3 (Hold) company have gained 5.2% over the past six months, underperforming the industry’s growth of 19.1%.
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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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