Several factors are contributing to that position. One is the company's plans to privately offer $250 million in senior subordinated notes due 2013 to qualified institutional investors.
LNR anticipates using about $216 million of the proceeds from the sale to redeem its nine 3/8% senior subordinated notes due 2008 at a redemption price of 104.688% of their principal amount plus about $7 million in accrued interest. The rest will be used to reduce secured and unsecured senior debt and toward general corporate purposes.
In addition, LNR is in the process of securitizing non-investment grade commercial mortgage-backed securities (CMBS) with about $763 million in principal amount. About $420 million of these securities, which will be rated investment grade, are offered for sale as collateralized debt obligations (CDO). The sale of the securities will generate more than $300 million in proceeds that will be used to pay down senior secured and unsecured debt, most of which can be re-borrowed. LNR expects this transaction to close in early July.
"With the upcoming closing of our CMBS resecuritization, enhancements in our bank lines and the proposed refinancing of our 9 3/8% senior subordinated debt, we enter the second half of the year in an excellent position to take advantage of new investment opportunities," Krasnoff says.
He adds: "While we continue to find compelling investments in this lower-yield environment, we remain very cautious about reinvesting cash generated from our asset sales, operations and new financings."
About $850 million in new investments have met LNR's acquisition criteria in the first half of this year. The company also has acquired about $95 million in its own stock this past quarter, for a total of a little more than $137 million for the year.
"In doing so, we were able to invest in our existing underlying assets at a discount to both book and to what we believe to be fair market value," Krasnoff says. "As we look ahead, we expect to continue fortifying our balance sheet to position LNR for the higher-yielding opportunities that emerge as the real estate markets continue to evolve."
LNR Property Corp.'s investments include office buildings, rental apartment communities, industrial/warehouse facilities, retail centers, hotels and land.
Want to continue reading?
Become a Free ALM Digital Reader.
Once you are an ALM Digital Member, you’ll receive:
- Breaking commercial real estate news and analysis, on-site and via our newsletters and custom alerts
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical coverage of the property casualty insurance and financial advisory markets on our other ALM sites, PropertyCasualty360 and ThinkAdvisor
Already have an account? Sign In Now
*May exclude premium content© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
