Zacks_Analysts' Blog : New Credit Facility for HME - Analyst Blog

Home Properties Inc. (HME) recently signed an unsecured revolving line of credit agreement for $275 million and obtained a new five-year unsecured term loan worth $250 million.  The new $275 million credit agreement replaces the company’s prior facility worth $175 million. The new facility bears a time period of four years and also comes with an option of extending it for an additional year.

The company expects to utilize the proceeds from the loan to pay the $140 million 4.125% exchangeable senior notes. The proceeds will also be used to fund near-term acquisitions, development expenditures and for other general corporate purposes. 

Through this strategic move, the company expects to strengthen its credit profile by obtaining additional liquidity and also enhance financial flexibility for its business transactions.

Home Properties reported third quarter 2011 FFO (funds from operations) of $46.4 million or 87 cents per share compared with $38.9 million or 79 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 restricted cash on hand of $204.0 million.Total debt of $2.5 billion was outstanding at the end of third quarter 2011.

Home Properties is an apartment real estate investment trust that owns, operates, develops, acquires and rehabilitates apartment communities primarily in selected Northeast and Mid-Atlantic markets.

Home Properties currently retains a Zacks #3 Rank, which translates into a short-term Hold rating. We are also maintaining our long-term Neutral recommendation on the stock. One of its competitors, Avalonbay Communities Inc. (AVB) also holds a Zacks #3 Rank.