Affordable Residential $70 million convertibles talked 7.25%-7.75%, up 12.5%-17.5%

By Rebecca Melvin

Princeton, N.J., Aug. 1 - Affordable Residential Communities Inc. announced Monday that its operating partnership, Affordable Residential Communities LP, plans to offer $70 million of 20-year convertible notes.

Price talk on the Rule 144A offering is for a coupon of between 7.25% and 7.75%, with an initial conversion premium of between 12.5% and 17.5%, according to a syndicate source.

Merrill Lynch is the sole bookrunner for the senior exchangeable notes.

There is a greenshoe of $10.5 million.

The notes are non-callable for five years and have puts in years five, 10 and 15. The notes also have dividend and takeover protection.

The notes are expected to price Thursday after the markets close, following a three-day roadshow in Los Angeles, Boston and New York.

The notes will be senior unsecured obligations of the operating partnership exchangeable into shares of the REIT.

Denver-based Affordable Residential Communities is a real estate investment trust.

The company plans to use proceeds to purchase manufactured homes that it intends to rent, to pay down obligations under its lease receivables facility and for general corporate purposes.

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