Lexington Real Estate Trust (LXP – Free Report) tapped the debt market with an offer of senior unsecured notes. The Company has valued the $ 400 million principal amount of notes at 99.758% of the aggregate principal amount. The notes bear a coupon rate of 2.402% and are expected to mature in October 2031.
Effective April 1, 2022, the Company will pay interest on the Notes semi-annually. Subject to the satisfaction of customary closing standards, the offer is expected to close on August 30, 2021.
The net proceeds of the offering will be used to repay all amounts outstanding under its unsecured revolving credit facility. Following the allocation referenced above, any remaining net proceeds will be used to repay all or part of the outstanding senior bonds of the company at 4.25% due in 2023 and for other general needs of the company. business, including acquisition opportunities.
Lexington’s efforts to strengthen its short-term liquidity in these difficult times and tap the debt market in today’s low interest rate environment are strategic adjustments. By repaying the outstanding amount under the credit facility, availability will increase, thereby improving Lexington’s financial flexibility.
As of August 5, Lexington had $ 215 million outstanding under its unsecured revolving credit facility and remaining availability of $ 385 million.
The Notes will earn 2.402%, which is significantly lower than the 4.25% interest rate on the Notes that will be redeemed. Therefore, it will likely lead to lower interest charges. The offering of the long-term notes to repay the debt, which is due to mature in 2023, will extend the average duration of the company’s debt.
However, the supply of notes increases Lexington’s long-term debt. The company ended the second quarter with net debt on 4.9X adjusted EBITDA.
Currently, Lexington wears a Zacks Rank # 3 (Hold). You can see The full list of Zacks # 1 Rank (Strong Buy) stocks today here.
The stock has gained 10.6% in the past three months compared to industry growth of 9.6%.
Image source: Zacks Investment Research
Similar movements by other finance companies
Gladstone Investment Company (GAIN – Free Report) recently priced a public offering of tickets worth a total of $ 117 million. The Notes, which will mature on November 1, 2028, will bear interest of 4.875%.
In August 2021, Franklin Resources, Inc. (BEN – Free Report) set the price for a public offering of two series of notes, totaling $ 450 million in principal. This includes all or a portion of its $ 300 million 2.800% notes due 2022 as well as $ 250 million of Legg Mason 3.950% senior notes due 2024.
The same month, Huntington Bancshares Incorporated (HBAN – Free Report) used a private offer of unsecured subordinated notes. The company has priced $ 500 million in principal of fixed rate notes at 100% of the total principal amount. The notes bear a coupon rate of 2.487% and are expected to mature in 2036.