Healthcare Trust of America (HTA) continued its progression as a publicly traded real estate investment trust by issuing $300M of unsecured bonds in the public debt markets. Pricing for the senior notes came in at a low 3.70% interest rate.
The company used proceeds from the issuance to repay debt and expand its portfolio of medical office buildings throughout the country.
This was HTA’s debut debt issuance in the public markets and attracted a high quality group of investors including leading insurance companies, pension plans, and fixed income fund investors.
Generally, first time issuers are forced to pay a premium interest rate relative to their peers, a sort of initiation fee to the market. However, HTA was able to price its deal inside its closest competitors as a result of investor’s interest in the company’s dedication to the medical office sector, the quality of its portfolio (with 91% occupancy and 57% of annual base rent coming from credit rated tenants – 40% investment grade), and its commitment to its investment grade balance sheet.
“This was a great execution for our company,” said Healthcare Trust of America’s CEO Scott Peters. “We were able to access debt that is competitively priced and lowered our cost of capital. It allowed us to align our current acquisitions with an attractive mix of long term debt and equity.
“Finally, it enabled us to maintain a well laddered debt maturity profile, with a manageable debt maturity schedule in the future. We were pleased that our company and its quality portfolio and asset management platform were recognized by this new group of investors.”