Realty Income Prices 3.25% Senior Notes of $350M at 108.241%

Realty Income Corporation O priced a public offering of $350 million of 3.25% senior unsecured notes at 108.241% of the face value.

Subject to the satisfaction of customary closing norms, the offering is likely to close on Jul 16.

The notes will mature on Jan 15, 2031, and will be issued as additional notes under the 3.25% notes series of which aggregate principal amounting $600 million was issued on May 8. The notes, which have been issued at a premium, will offer an effective yield to maturity of 2.341%.

The company intends to utilize the net proceeds from the offering to repay outstanding balance under its $3-billion revolving credit facility. This will increase availability under the credit facility, thereby, boosting Realty Income’s liquidity.

The remaining balance is expected to be made available for any potential investment opportunities and other general corporate purposes.

The company’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, amid such a crisis, Realty Income has emerged as a company with decent financial health through its efforts to boost liquidity and strengthen the balance sheet.

In fact, as of Jul 1, it had $628.6 million of outstanding borrowings under its revolving credit facility that had a weighted average interest rate of 0.92%. As of the same date, liquidity stood at $2.7 billion, consisting of $2.4 billion of available borrowing capacity on the revolving credit facility, cash on hand of $74 million and a $300-million term deposit.

However, the note offering increases the company’s long-term debt.

Moreover, shares of this Zacks Rank #3 (Hold) company have gained 13.4% over the past three months compared with the industry’s rally of 12.2%.

Stocks to Consider

City Office REIT, Inc.’s CIO funds from operations (“FFO”) per share estimates for the ongoing year have been unchanged at $1.11 over the past 30 days. The company currently carries a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Washington Prime Group Inc.’s WPG Zacks Consensus Estimate for 2020 FFO per share has been revised marginally to 73 cents over the past month. The company currently carries a Zacks Rank of 2.

Gladstone Land Corporation’s LAND FFO per share estimates for 2020 have been unchanged at 68 cents over the past month. It currently carries a Zacks Rank of 2.

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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