AHH - Armada Hoffler plans debt private placements after getting credit rating - report

After receiving its first credit rating, Armada Hoffler Properties ( NYSE: AHH ) plans to raise capital through private placements as a way to shift away from variable-rate debt, the Wall Street Journal reported Tuesday.

The REIT that invests in office, retail and multifamily properties received a BBB rating with a stable trend credit rating from DBRS Morningstar, the company said Tuesday. BBB is an investment-grade rating, which will allow the company to borrow at lower costs than below-investment-grade ratings.

The credit rating gives Armada Hoffler ( AHH ) the ability to raise funds through private debt placements to convert is ~$1.1B in debt from short-term variable rates to long-term fixed rates, the company's CFO, Matthew Barnes-Smith told the WSJ.

In the statement regarding the credit rating, Armada Hoffler ( AHH ) President and CEO Louis Haddad pointed out that the "investment-grade rating will provide us access to an expanded pool of  investors and additional source of capital to fund our growth initiatives."

In the first of the private placements, the company plans to raise ~$100M-$200M in Q2 and Q3 of this year, depending on Treasury rates and other market conditions, Barnes-Smith said. Armada Hoffler ( AHH ) is aiming to shift the percentage of debt that depends on variable rates from 55%, currently, to ~10% over the next five to 10 years, the CFO said.

Take a look at the level of AHH's long-term debt on its balance sheet for the past 10 years here.

In October, Armada Hoffler ( AHH ) increased the capacity of its unsecured credit facility to $550M from $355M.

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