BRE Properties Inc. (BRE), a real estate investment trust (REIT) that develops and manages multi-family apartment communities, has recently announced an offer to sell $300 million worth of senior unsecured notes due 2021. The notes are priced at 99.81% of par value with a coupon of 5.2%.
The unsecured notes are scheduled to mature on March 15, 2021, with interest payable in March and September every year. BRE Properties intends to utilize the proceeds from the offer to repay debt under its $750 million unsecured revolving credit facility and for other general corporate purposes.
BRE Properties has established quite a track record of conservative capital management and cash returns to shareholders in the form of steady dividend and share repurchases. Since its inception in 1970, the company has paid uninterrupted quarterly dividends to shareholders. The current dividend yield is also attractive at 3.53%.
Over the years, BRE Properties has provided long-term value to shareholders by focusing on developing and acquiring apartments with customer-defined amenities, and providing professional management services delivered by well-trained associates. The properties of the company are usually located near business, transportation, employment, and recreation centers of a city, essential to customers who value the convenience, service, and flexibility of rental living.
Despite the housing slowdown, home values in most BRE Properties’ markets are still among the highest in the U.S. and the rent-to-own gap remains high. Consequently, the company has a strong upside potential. We maintain our Neutral rating on BRE Properties, which currently has a Zacks #3 Rank that translates into a short-term ‘Hold’ recommendation.
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