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SL Green Enhances Financial Flexibility

Zacks Equity Research

SL Green Realty Corp. (SLG) disclosed the expansion and extension of its unsecured credit facility. The move is aimed at enhancing its financial flexibility and gain competitive advantage.

In particular, the company modified and increased the term loan part of its unsecured corporate credit facility by $383 million to $783 million. Furthermore, the cost of the term loan has been lowered to 140 basis points over LIBOR.

The term loan’s maturity date has also been extended to June 2019. Notably, a $1.2 billion revolving line of credit is also included in the facility, which will mature in March 2018, inclusive of the company's total one-year as-of-right extension option.

We believe the move to be a strategic fit as it not only offered reduction in cost of funds but also addition terms, thereby enhancing the company’s financial flexibility. Notably, the company has been seeking to tap opportunities to boost its overall portfolio quality, including the acquisition of premium assets and divestiture of non-core ones.

Recently, SL Green disclosed a deal with Ivanhoe Cambridge to buy the latter’s stake in 388-390 Greenwich Street properties. The consolidated investment interest is valued at $1.585 billion. With the transaction, SL Green will obtain the full ownership of the 2.6 million square foot headquarters of Citigroup Inc. (C) in Tribeca, a neighborhood in lower Manhattan, New York City.

SL Green currently carries a Zacks Rank #3 (Hold). Investors interested in the REIT industry may consider stocks like Cousins Properties Incorporated (CUZ) and Public Storage (PSA). Both stocks carry a Zacks Rank #2 (Buy).

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