Dueling debt offerings
A pair of listed net lease REIT completed recent debt deals with VICI Properties (NYSE: VICI) and Gladstone Commercial (NASDAQ: GOOD) tapping lenders for capital.
VICI’s $750 million debt capital raise via 5.125% notes due November-2031 will repay its existing $750 million senior notes due February-2025. Those soon to be matured notes hold a tasty 3.500% interest rate, meaning stated debt service will rise by 162.5 basis points ($12.4 million annually or 46%).
GOOD’s $75 million private placement priced at 6.47% fixed for a 5-year note. As of 9/30/2024 the REIT held $10.5 million in unrestricted cash and owed $34 million of mortgage payables maturing in 2025 with a credit facility containing $70 million of capacity (~$420 million drawn). The 6.47% fixed rate on the private placement compares to a blended overall mortgage interest rate of 4.23%, term loan rates of SOFR+130, and an overall debt outstanding average weighted interest rate of 5.47%.
SOFR and the 10-year US treasury have essentially converged after experiencing a 175bps spread just 3 months ago while the overall yield curve has flattened with current pricing holding a 4-handle throughout.
Powell’s punch
Unplanned sale on net lease REIT shares courtesy of Chairman Powell and company just in time for the holidays, happy shopping:
-Sean Hostert