Realty Income to repay $746 million of revolver debt via new notes

By Sarah Lizee

Olympia, Wash., Nov. 29 – Realty Income Corp. plans to repay borrowings under its $2 billion revolving credit facility using proceeds from a three-tranche offering of notes, according to a 424B5 filing with the Securities and Exchange Commission.

As of Nov. 27, there was about $746 million of outstanding borrowings under the revolver, which matures June 30, 2019 and has two six-month extension options.

The weighted average interest rate as of Nov. 27 was about 2.2% per year.

Interest under the revolver is Libor plus 90 basis points with a facility commitment fee of 15 bps, for all in drawn pricing of 105 bps over Libor.

If the company’s credit rating is lower than BBB-/Baa3 or its senior unsecured debt is unrated, interest would be Libor plus 155 bps. If the credit rating is A-/A3 or higher, the rate would be Libor plus 85 bps.

The commitment fee is 30 bps for a rating lower than BBB–/Baa3 or 12.5 bps for a credit rating of A-/A3 or higher.

Interest on drawdowns under the company’s $70 million term loan and $250 million term loan are also subject to adjustment based on changes to the company’s credit ratings.

Funds from the new issue will also be used to redeem the company’s $550 million of outstanding 2019 notes, for development and acquisition of properties and for general corporate purposes.

The real estate investment trust for retail and commercial properties is based in Escondido, Calif.

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