Regency Centers Corporation (REG), a real estate investment trust (REIT), has recently amended its existing unsecured revolving credit facility in a concerted effort to strengthen its liquidity and reduce refinancing risk. The new credit facility has increased the borrowing capacity by $200 million to an aggregate of $800 million.
Regency has also extended the maturity of the revolving credit facility by a year. The modified credit facility is currently scheduled to mature in September 2016 and has an accordion feature that would further enable Regency to extend the maturity by an additional year, subject to the fulfillment of certain conditions.
Wells Fargo Securities, LLC, part of Wells Fargo & Company (WFC); and PNC Capital Markets LLC, the investment banking division of PNC Financial Services Group Inc. (PNC), were the joint Lead Arrangers and joint Book Managers for the transaction.
The new credit facility bears an interest at LIBOR plus 140 basis points and is based on the current credit ratings of the company. Earlier in April this year, Fitch Ratings, the global credit rating firm, had reaffirmed the credit rating of BBB for Regency. The BBB rating denotes a fairly stable outlook with a relatively strong credit quality, low default risk, and adequate capacity to meet current financial commitments.
While reaffirming Regency's credit rating, Fitch had considered its high quality asset portfolio, solid past operating performance, strong liquidity, adequate debt service coverage, manageable debt maturity schedule and ability to access capital from varied sources.
Jacksonville, Florida-based Regency owns, operates and develops grocery-anchored retail shopping centers in the U.S. The average household income in the markets in which Regency has a significant presence is over $100,000. With properties in high income, high-barrier markets, Regency's retail strip center portfolio is among the best in the sector, which allows it to continually perform at the top-end of its peer group.
Regency maintains a conservative capital structure and follows a self-funding capital strategy to fund its growth, which includes disposal of non-strategic assets and a continued focus on industry-leading co-investment partnership programs.
We maintain our Neutral rating on Regency, which currently has a Zacks #3 Rank that translates into a short-term Hold recommendation.