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Vornado (VNO) Extends Credit Facility, Lowers Cost of Debt
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Vornado Realty Trust (VNO - Free Report) recently boosted the company's financial position by expanding and extending one of its two revolving credit facilities. In fact, the amended credit line now stands at $1.5 billion and is slated to mature in March 2024 (as fully extended).
Further, the move has enabled the company to lower its borrowing cost. In fact, it reduced interest rate on the extended facility from LIBOR+100 basis points (bps) to LIBOR+ 90 bps. Nonetheless, facility fee remains at 20 bps.
This refinancing offers Vornado a cheaper line of credit and helps reduce annualized interest expense. Moreover, extended maturities of the credit line will help the company improve its maturity profile and enjoy greater liquidity for day-to-day operations. The move will also boost its cash flow and alleviate the bottom-line pressure. The interest-rate reduction offers greater financial flexibility and will strengthen Vornado’s balance sheet.
In fact, the company has been amending its debt instruments through refinancing and amendments, to efficiently address the financial obligations. In February, Vornado extended maturity on a $580-million unsecured term loan from 2020 to 2024, lowering the interest rate on the loan to LIBOR plus 1.55%. These efforts are expected to support its growth endeavors.
Notably, Vornado’s financial strength is indicated by its $3.3 billion in liquidity and nearly $10 billion of unencumbered assets. Additionally, it has another revolving credit facility worth $1.25 billion that will mature in January 2023 (after considering any further extension). It carries an interest rate of LIBOR+100 bps and a facility fee of 20 bps.
Nonetheless, Vornado faces intense competition from developers, owners and operators of office properties and other commercial real estates, including sublease space available from its tenants. This influences the company’s ability to attract and retain tenants at relatively higher rents than its competitors, in turn, affecting long-term profitability.
Over the past three months, shares of this Zacks Rank #3 (Hold) company have underperformed the industry it belongs to. In fact, its shares have gained 8.2% compared with the industry’s rally of 16.2% during the same time frame.
Plymouth Industrial REIT, Inc’s (PLYM - Free Report) shares have appreciated 36.6% over the past three months. Currently, the stock sports a Zacks Rank of 1.
Alexandria Real Estate Equities, Inc’s (ARE - Free Report) shares have increased 26.2% in three months’ time. The stock currently carries a Zacks Rank of 2 (Buy).
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Vornado (VNO) Extends Credit Facility, Lowers Cost of Debt
Vornado Realty Trust (VNO - Free Report) recently boosted the company's financial position by expanding and extending one of its two revolving credit facilities. In fact, the amended credit line now stands at $1.5 billion and is slated to mature in March 2024 (as fully extended).
Further, the move has enabled the company to lower its borrowing cost. In fact, it reduced interest rate on the extended facility from LIBOR+100 basis points (bps) to LIBOR+ 90 bps. Nonetheless, facility fee remains at 20 bps.
This refinancing offers Vornado a cheaper line of credit and helps reduce annualized interest expense. Moreover, extended maturities of the credit line will help the company improve its maturity profile and enjoy greater liquidity for day-to-day operations. The move will also boost its cash flow and alleviate the bottom-line pressure. The interest-rate reduction offers greater financial flexibility and will strengthen Vornado’s balance sheet.
In fact, the company has been amending its debt instruments through refinancing and amendments, to efficiently address the financial obligations. In February, Vornado extended maturity on a $580-million unsecured term loan from 2020 to 2024, lowering the interest rate on the loan to LIBOR plus 1.55%. These efforts are expected to support its growth endeavors.
Notably, Vornado’s financial strength is indicated by its $3.3 billion in liquidity and nearly $10 billion of unencumbered assets. Additionally, it has another revolving credit facility worth $1.25 billion that will mature in January 2023 (after considering any further extension). It carries an interest rate of LIBOR+100 bps and a facility fee of 20 bps.
Nonetheless, Vornado faces intense competition from developers, owners and operators of office properties and other commercial real estates, including sublease space available from its tenants. This influences the company’s ability to attract and retain tenants at relatively higher rents than its competitors, in turn, affecting long-term profitability.
Over the past three months, shares of this Zacks Rank #3 (Hold) company have underperformed the industry it belongs to. In fact, its shares have gained 8.2% compared with the industry’s rally of 16.2% during the same time frame.
Stocks to Consider
Ashford Hospitality Trust, Inc’s (AHT - Free Report) shares have gained 24.5% over the past three months. At present, the stock flaunts a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Plymouth Industrial REIT, Inc’s (PLYM - Free Report) shares have appreciated 36.6% over the past three months. Currently, the stock sports a Zacks Rank of 1.
Alexandria Real Estate Equities, Inc’s (ARE - Free Report) shares have increased 26.2% in three months’ time. The stock currently carries a Zacks Rank of 2 (Buy).
Today's Best Stocks from Zacks
Would you like to see the updated picks from our best market-beating strategies? From 2017 through 2018, while the S&P 500 gained +15.8%, five of our screens returned +38.0%, +61.3%, +61.6%, +68.1%, and +98.3%.
This outperformance has not just been a recent phenomenon. From 2000 – 2018, while the S&P averaged +4.8% per year, our top strategies averaged up to +56.2% per year.
See their latest picks free >>