UPDATE 2-Colonial ups 2009 FFO view, closes credit facility
* Ups FY09 FFO view to $1.95-$2.15/shr
* Closes $156.4 mln credit facility with Fannie Mae
* Uses 8 multi-family properties as collaterals
* Shares rise more than 13 pct (Adds analyst comments, details; updates share movement)
By Biswarup Gooptu
BANGALORE, June 1 (Reuters) - Colonial Properties Trust CLP.N raised its full-year funds from operations (FFO) outlook and also said it closed a secured credit facility with Fannie Mae, sending the real estate investment trust's shares up more than 13 percent.
The multifamily-focused REIT now sees fiscal 2009 FFO of between $1.95 a share and $2.15 a share. In April, it had forecast 2009 FFO of $1.85 to $2.00 a share.
Analysts were expecting FFO of $1.89 a share for the same period, according to Reuters Estimates.
However, Keefe, Bruyette and Woods analyst Stephen Swett said he did not view the outlook raise as overly surprising.
"They have raised it because they've been able to buy back some debt at a discount," he said, adding that investors would not see much benefit in companies that have recorded one-time gains.
"Without a change in the operating FFO, I don't really view it (the raise) as that material," the analyst noted.
Fiscal 2009 operating FFO view remained at $1.13 to $1.20 a share.
FFO, a performance measure for REITs, removes the profit-reducing effect of depreciation, a non-cash accounting item.
The company cited an increase in projected gains from an unsecured bonds repurchase programme and reductions in its 2009 general and administrative expenses, among others, as reasons for the increase in outlook.
Colonial said, to date, it has repurchased $311.8 million of its outstanding unsecured notes during the second quarter, which is expected to result in gains of 75 cents to 85 cents a share in FFO, up from its prior view of 65 cents to 70 cents a share.
Colonial Properties also closed a $156.4 million secured credit facility with Fannie Mae FNM.N FNM.P, the largest U.S. home funding company.
The facility, which was originated by Grandbridge Real Estate Capital LLC, comprises of two separate tranches collateralized by eight multi-family properties.
Colonial Properties said the new facility has a 10-year term and carries a fixed interest rate of 5.31 percent. The proceeds will be used to repay portion of the outstanding balance under its $675 million unsecured line of credit.
However, analyst Swett said that while the market was not currently worried, the long-term viability of capital-constrained mortgage giant Fannie Mae and its sibling, Freddie Mac FRE.N FRE.P, supporting multi-family housing could be called into question.
The U.S. government is relying heavily upon the two government-sponsored entities to break the housing logjam, but they are also under a federal mandate to start winding down their investments next year to limit risks to taxpayers.
Fannie and Freddie could spin off their multi-family housing business into a separate entity to shrink their scope and business, Swett said.
Shares of the Birmingham, Alabama-based REIT were up 11 percent at $8.64 in afternoon trade, making them one of the top percentage gainers on the New York Stock Exchange. They had touched $8.81 earlier in the session. (Editing by Anil D'Silva and Aradhana Aravindan)
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