Hillenbrand (NYSE:HI), Inc., a diversified industrial company, has finalized the sale of two industrial properties in Ohio to affiliates of Blue Owl Real Estate Capital LLC for approximately $54.9 million. The transaction, completed on Wednesday, involves Hillenbrand's wholly-owned subsidiary, Milacron LLC, entering into a sale agreement with HILBAOH001 LLC and HILMTOH001 LLC, collectively referred to as the Buyers.
The properties, previously owned and operated by Milacron LLC, will be leased back to the Seller under a 20-year absolute triple net lease agreement, with the option to renew for four additional five-year terms. The Company has guaranteed the payment obligations under this lease, which is set to generate an annual operating lease expense of about $5.0 million for Hillenbrand.
The lease terms also include rental increases during the third and fourth renewal periods, based on the greater of 2.75% or a market rate specified in the agreement.
Hillenbrand plans to use the net proceeds from this deal for general corporate purposes, including the repayment of long-term debt. This strategic move allows the Company to free up capital while maintaining its operational presence in the sold properties.
In other recent news, Hillenbrand Inc . has experienced significant developments in its earnings and revenue results. The company reported a 14% increase in total revenue in the second quarter of fiscal year 2024, largely due to the acquisition of Schenck Process Food and Performance Materials business.
However, Hillenbrand has updated its full-year revenue forecast to $3.2 billion to $3.3 billion, with adjusted EBITDA between $512 million and $536 million, and adjusted EPS of $3.30 to $3.50.
KeyBanc has adjusted its outlook for Hillenbrand, reducing its price target to $45 while maintaining an Overweight rating, suggesting confidence in the company's long-term prospects despite potential cyclical challenges.
On the other hand, DA Davidson has downgraded Hillenbrand's stock from Buy to Neutral and revised the price target to $33, citing continued weakness in the company's Advanced Process Solutions segment and sluggishness in the Molding Technology Solutions division.
InvestingPro Insights
As Hillenbrand, Inc. strategically maneuvers its real estate assets to bolster its financial standing, it's noteworthy to consider the company's present market performance and future outlook. With a market capitalization of $1.85 billion, Hillenbrand is navigating the market with a notable debt burden, as reflected by an adjusted P/E ratio over the last twelve months leading up to Q3 2024 standing at 49.76. This valuation comes amidst a backdrop of a 16.53% revenue growth during the same period, indicating a company that is expanding its top line.
InvestingPro Tips highlight two contrasting aspects of Hillenbrand's current situation. Firstly, the company has a commendable track record of raising its dividend for 16 consecutive years, showcasing a commitment to returning value to shareholders. This is further supported by a dividend yield of 3.38% as of mid-2024. On the other hand, the stock has experienced a significant downturn, with a one-month price total return of -21.64% and trading near its 52-week low, which could suggest a potential buying opportunity as the RSI indicates the stock is in oversold territory.
With analysts expecting net income growth this year, there is a positive outlook on profitability which could be an encouraging sign for investors. For those interested in a deeper dive into Hillenbrand's financial health and stock performance, additional InvestingPro Tips are available, offering a comprehensive analysis to aid in making informed investment decisions.
It is important for investors to consider these metrics and insights in the context of the company's latest strategic real estate transaction, as these moves are aimed at improving Hillenbrand's financial flexibility and operational efficiency. For further details and expert analysis, more InvestingPro Tips can be found at: https://www.investing.com/pro/HI.
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