Specialty real estate investment trust (REIT) Healthpeak Properties (PEAK -1.10%) is floating an issue of senior unsecured notes in order to raise capital. It totals $600 million in aggregate principal amount, with the notes maturing on Jan. 15, 2031, and paying interest of 2.875%. The company, which concentrates on several types of medical facilities, is selling the notes to investors at 99.125% of the principal amount.
Interest is to be paid bi-annually, on Jan. 15 and July 15 of every year. The first payment will occur on Jan. 15, 2021.
Healthpeak said it will use the bulk of the issue's estimated $590.9 million in net proceeds to retire previously issued notes with higher interest payments. The remainder is to be utilized for "general corporate purposes," which might include the retirement of debt from the REIT's revolving credit facility.
Although Healthpeak operates in the senior housing segment, which has been hit hard by the SARS-CoV-2 coronavirus outbreak, this is responsible for only around one-third of its operating income. Nevertheless, the stock fell in the early days of the pandemic's spread to the U.S., and has yet to fully recover. That decline lifted the company's dividend yield above 5%.
The joint book-running managers for the issue are Wells Fargo Securities, Barclays, Bank of America, and Morgan Stanley. The company expects the issue to close on Tuesday, June 23.
This past Tuesday, Healthpeak's stock fell by 1.9%, which was steeper than the overall stock market's decline on the day, not to mention the performance of numerous peer REITs.