Excel Trust, Inc. (EXL), a real estate investment trust (REIT) primarily focusing on retail assets, has recently announced an equity offer of 12.5 million shares at $10.94 each to raise cash to fund acquisition and repay a portion of its debt. The company will also grant the underwriters an option to purchase an additional 1.9 million shares to cover any over-allotments.
Morgan Stanley (MS) – a global financial services firm; Wells Fargo Securities – part of Wells Fargo & Company (WFC); KeyBanc Capital Markets – the investment banking division of KeyCorp (KEY); and Barclays Capital – the investment banking division of Barclays PLC (BCS) are acting as joint book-running managers for the public offering.
Excel Trust anticipates raising net proceeds of $150.2 million from the equity offer with full exercise of the underwriters’ option. The company intends to utilize the proceeds to fund a part of the $110 million acquisition cost of ‘The Promenade’ – a 433,000 square foot retail shopping center in Scottsdale, Arizona. The remainder of the proceeds would be utilized to repay debt under its unsecured revolving credit facility and for corporate purposes.
Since its inception, Excel Trust has grown its portfolio through strategic acquisitions to a gross asset value of approximately $414 million, excluding properties under contract. The company targets high-quality regional community centers and neighborhood grocery-anchored centers, primarily anchored by leading retailers of the country. Excel Trust usually enters into long-term leases with its tenants, which insulate it from short-term market volatility.
We currently have an ‘Underperform’ recommendation and a Zacks #4 Rank for Excel Trust, which translates into a short-term ‘Sell’ recommendation and indicates that the stock is expected to perform well below the overall U.S. equity market for the next 1–3 months.
