Federal Realty Investment Trust (FRT) recently announced the closing of a new unsecured term loan worth $275 million. The loan bears interest at an annual rate of LIBOR plus 145 basis points and is expected to mature in November 2018. Federal Realty also has an option of increasing the term loan to $350 million.
The company expects to utilize the proceeds from the loan to pay the outstanding balances under the Trust’s $400 million revolving credit facility and to fund acquisitions, development expenditures and for other general corporate purposes.
Federal Realty reported third quarter 2011 FFO (Funds from Operations) of $63.9 million or $1.01 per share compared with $58.8 million or 95 cents per share in the year-earlier quarter. Fund from operations, a widely used metric to gauge the performance of REITs, is obtained after adding depreciation and amortization and other non-cash expenses to net income.
At quarter end, the company had cash and cash equivalents of $22.1 million. With strong quarterly results, Federal Realty increased its FFO guidance for full-year 2011 from the earlier range of $3.95 – $4.02 per share to $4.02 – $4.04 per share.
Rockville, Maryland-based Federal Realty Investment Trust engages in owning, managing, developing, and redeveloping retail, mixed-use and street-retail properties, primarily in densely populated locations. Its community and neighborhood shopping centers are anchored by supermarkets, drug stores or high-volume, value-oriented retailers, which provide consumer necessities.
Federal Realty has one of the strongest balance sheets in the sector. Furthermore, the company has the unique distinction of boosting shareholders’ value through dividends for 44 consecutive years – the longest in the REIT industry.
Federal Realty currently retains a Zacks #2 Rank, which translates into a short-term Buy rating. We are also maintaining our long-term Neutral recommendation on the stock. One of its competitors, National Retail Properties, Inc. (NNN) also has a Zacks #2 Rank.
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