iStar will revamp 4% bonds, reports ‘strong liquidity’ after quarter

By Devika Patel

Knoxville, Tenn., May 4 – iStar Inc. has been busy issuing and refinancing debt during the first quarter, and has an eye on its 4% unsecured bonds due in November, which it plans to refinance this summer or fall.

The company also said it has a “strong liquidity position” of over $1.1 billion.

“During the first quarter, we successfully repriced our $500 million senior secured credit facility, reducing the coupon by 75 basis points,” chief operating officer and chief financial officer Geoffrey G. Jervis said on the company’s first quarter earnings conference call on Thursday.

“The facility was repriced at par and now bears interest at an annual rate of Libor plus 3.75%, with a 1% Libor floor.

“In addition, this quarter we issued $375 million of new five-year 6% unsecured notes due April 2022.

“The company used proceeds from the offering to repay its $100 million 5.85% senior unsecured notes at maturity in March and in April we early repaid the $275 million 9% notes due in June,” he said.

Jervis noted that the company is not done refinancing its debt.

“Next up is the $550 million of 4% unsecured bonds that mature in November.

“We anticipate refinancing these bonds this summer or in the early fall,” he said.

Jervis also pointed out that the company has over $1.1 billion of available liquidity.

“We remain in a strong liquidity position with over $1.1 billion of cash and available capacity on our revolver,” he said.

The company’s leverage was 2x at the end of the quarter, below its targeted range of 2x to 2.5x.

On March 8, iStar priced a $375 million issue of five-year senior notes (B+) at par to yield 6%.

The yield printed on top of official price talk in the 6% area but at the wide end of initial guidance of 5¾% to 6%.

BofA Merrill Lynch, J.P. Morgan Securities LLC, Barclays, Citigroup Global Markets Inc., Morgan Stanley & Co. LLC, Raymond James and Wells Fargo Securities LLC were the joint bookrunners.

The New York-based real estate developer used the proceeds with cash on hand to repay in full its 5.85% senior notes due March 2017 and redeem its 9% senior notes due June 2017 seven weeks early on April 12.

The company paid 101 plus accrued interest for the 9% bonds.

iStar is a New York-based investor and developer of real estate and real estate related projects.

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