SL Green Signs New Credit Facility - Analyst Blog

By Zacks | November 26, 2012 AAA

SL Green Realty Corp. (SLG), a real estate investment trust (REIT), has recently increased its erstwhile $1.5 billion revolving credit facility to $1.6 billion. Besides increasing the borrowing capacity, the new credit facility reduced the borrowing costs and extended the debt maturity.

Wells Fargo Securities, LLC - part of Wells Fargo & Company (WFC); J.P. Morgan Securities LLC - part of JPMorgan Chase & Co. (JPM) and Deutsche Bank Securities Inc.- part of Deutsche Bank AG (DB) acted as  joint book running managers for the transaction.

The new facility consists of a $1.2 billion revolving line of credit and a $400 million term loan, which carries interest at 145 basis points over LIBOR and 165 basis points over LIBOR, respectively. The new facility is scheduled to mature in March 2018 and includes an accordion feature by virtue of which the company has a one-year extension option on the revolving line of credit.

The transaction provides additional liquidity and enhances financing flexibility. Moving forward, the strategic move could help seize favorable investment opportunities which in turn are expected to boost top-line growth.

During the third quarter of 2012, SL Green closed on a $175.0 million financing with a 1-year term and a 1-year extension option. This facility  bears interest at 300 basis points over LIBOR.

SL Green Realty primarily acquires, owns, repositions and manages Manhattan commercial properties. As of September 30, 2012, SL Green owned interests in 77 Manhattan properties totaling more than 39.3 million square feet. This included ownership interests in 27.5 million square feet of commercial properties. SL Green Realty currently retains a Zacks #3 Rank, which translates into a short-term Hold rating. We have a long-term Neutral recommendation on the stock.

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