Healthcare Trust prices notes at spreads comparable to larger peers

By Devika Patel

Knoxville, Tenn., Aug. 1 – Healthcare Trust of America, Inc. obtained a new upsized notes financing in the second quarter at pricing comparable to its larger, higher-rated peers and also revised its credit facility by increasing the revolver to $1 billion and pushing its maturity, and that of its $300 million term loan, out another five years.

“We were well-positioned to come to the debt markets,” chief financial officer, treasurer and secretary Robert A. Milligan said on the company’s second-quarter earnings conference call on Tuesday. “We were able to come to the debt markets at an attractive time.

“We launched a $600 million unsecured note offering, split between five- and 10-year notes.

“We were pleased with the overall demand and ultimately upsized the offering to $900 million, split between a $500 million 10-year issuance priced at 3.75% and a $400 million five-year issuance priced at 2.95%.

“While the prices were certainly attractive on an absolute basis, we were more pleased with the fact that the spreads came in right on top of our larger and higher-rated peers, an important fact that we think will differentiate Healthcare Trust as we continue to compete in this competitive sector.”

Healthcare Trust also revamped its credit facility.

“Our balance sheet was further enhanced by the credit facility that we closed last Thursday, which increased our revolver to $1 billion and pushed out the maturities of it and a $300 million term loan another five years, ensuring limited debt maturities for the foreseeable future,” Milligan said.

The company also maintained a strong balance sheet with plenty of liquidity.

“We have a strong investment-grade balance sheet, with over $1 billion of available liquidity,” chairman, chief executive officer and president Scott D. Peters said on the call.

Total liquidity at the end of the quarter was $935.9 million, including $844.5 million of availability under the company’s revolver and $91.4 million of cash and cash equivalents.

As of June 30, Healthcare Trust had cash and cash equivalents of $91.4 million.

At the end of the quarter, the company had total leverage of 6.3x measured as debt to adjusted EBITDA.

On June 1, Healthcare Trust of America Holdings, LP sold $900 million in two tranches of guaranteed senior notes (Baa2/BBB).

The company priced $400 million of 2.95% five-year notes at 99.938 to yield 2.963%, or a spread of Treasuries plus 120 basis points.

Healthcare Trust sold $500 million of 3.75% 10-year notes at 99.492 to yield 3.811% and a Treasuries plus 160 bps spread.

Wells Fargo Securities LLC, J.P. Morgan Securities LLC, U.S. Bancorp Investments, Inc. and Jefferies LLC were the bookrunners.

The notes are guaranteed by Healthcare Trust of America, Inc.

Proceeds were used to repay a portion of outstanding debt under the company’s revolving credit and term loan facility, to fund a portion of acquisition asset costs and for general corporate purposes.

Healthcare Trust is a Scottsdale, Ariz.-based real estate investment trust for medical office buildings.

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