Whitestone REIT Enters New $750 Million Credit Facility Deal
Whitestone REIT Announces Major Credit Facility Update
Whitestone REIT, a notable player in the real estate industry, has recently made significant strides by announcing updates to its credit facility, now totaling $750 million. This development showcases the company's robust financial position and commitment to pursuing growth.
Understanding the New Terms of the Credit Facility
The credit facility is composed of a $375 million revolving credit line and a $375 million term loan. The revolving portion is set to mature in September 2029, offering two options to extend the maturity date, while the term loan will mature in January 2031. These extended terms reflect Whitestone's proactive approach in managing its financial resources.
Interest Rates and Financial Mechanics
Whitestone has secured favorable interest rates for the new facility, with the revolver initially priced at SOFR plus 1.40% and the term loan at SOFR plus 1.35%. Additionally, the company has taken strategic measures by entering into interest rate swaps, effectively fixing the interest rates on the term loan at a steady rate of between 3.36% and 3.42%, which promotes financial stability.
Key Objectives Achieved Through Renewal
The renewal of this credit facility has allowed Whitestone to achieve several essential objectives, enhancing its operational capabilities. The company aims to:
- Secure a vital earnings variable, enabling it to target 5-7% Core Funds From Operations (FFO) per share growth for the upcoming years.
- Extend the company's weighted average maturity, pushing it out to 2030 and eliminating any maturities due in 2026.
- Reduce its variable debt to nearly 12%, solidifying its financial foundation.
- Enhance its borrowing capacity, providing more flexibility for future investments.
- Widen its banking relationships, strengthening the overall financial support network.
Management Commentary on the New Facility
In a statement from CEO Dave Holeman, he expressed satisfaction with the enhanced facility, highlighting a $215 million increase in size, lower interest rates, extended maturities, and the addition of three strong new banking partners. These improvements indicate a solid trend of operational strengthening and increased financial flexibility that will support the company's ongoing growth initiatives.
Strategic Growth and Financial Performance
Holeman further noted that since the previous extension in 2022, Whitestone has successfully improved its leverage metrics and achieved notable growth in its Same Store Net Operating Income. This progress is attributed to a focus on disciplined capital spending and operational efficiency.
Co-Lead Arrangers for the Credit Facility
The financial institutions involved in arranging this credit facility included BMO Capital Markets Corp., BofA Securities, Inc., Capital One, Citizens Bank, KeyBanc Capital Markets Inc., Truist Securities, and U.S. Bank National Association, showcasing a diverse pool of respected partners.
About Whitestone REIT
Whitestone REIT is a community-centered real estate investment trust that specializes in acquiring, owning, operating, and developing open-air retail centers across some of the fastest-growing U.S. markets. These centers are strategically designed to serve diverse community needs, providing essential services like dining, fitness, and education, all geared towards enhancing local experiences.
Frequently Asked Questions
What is the significance of Whitestone REIT's new credit facility?
The new credit facility enhances financial flexibility, lowers interest rates, and supports growth initiatives in retail real estate.
What are the maturity dates associated with the credit facility?
The revolver matures in September 2029 with extensions possible, while the term loan matures in January 2031.
How does the interest rate compare to previous agreements?
The current facility offers more competitive rates, benefiting from strategic interest rate swaps that fix the term loan rates.
Which banks were involved in this credit facility arrangement?
The facility was arranged by several major banks, including BMO Capital Markets, BofA Securities, and others, ensuring a strong financial backing.
What growth targets has the company set moving forward?
Whitestone aims for a 5-7% Core FFO per share growth target for the next few years, leveraging its strengthened financial position.
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