Preferred primary calendar builds; DDR comes upsized, tight to talk; Public Storage firms

By Stephanie N. Rotondo

Seattle, May 30 – A preferred stock trader speculated that the shortened holiday week would “probably see a couple of deals” on Tuesday.

To kick things off, DDR Corp. brought a $175 million $25-par offering, while CIT Group Inc. said it was selling a $1,000-par issue.

For its part, DDR priced $175 million of class A cumulative redeemable preferred stock at par to yield 6.375%.

Price talk was 6.5% to 6.625%.

Ahead of pricing, a trader speculated the deal would grow to $150 million from an originally expected deal size of $100 million, seeing the paper at $24.75 bid in the early gray market.

Later in the day, the issue was pegged at $24.90 bid, par offered.

A market source opined that the deal “would do OK, but not great,” especially as the deal size was upped and the coupon came tighter than talk.

“Plus they are a retail [real estate investment trust], and right now that is not a favored asset class,” he commented.

Wells Fargo Securities LLC, RBC Capital Markets, Stifel Nicolaus & Co. Inc. and UBS Securities LLC ran the books.

The Beachwood, Ohio-based company will use the proceeds to repay debt – including its 4.75% notes due 2018 – and for general corporate purposes.

Meanwhile, CIT Group said it was offering up to $325 million of $1,000-par series A fixed-to-floating rate noncumulative perpetual preferred stock.

Pricing information was not available as of 6 p.m. ET.

Morgan Stanley & Co. LLC, Barclays and Credit Suisse Securities (USA) LLC are the joint bookrunners.

Dividends will be fixed until June 15, 2022, at which point the rate begins to float at Libor plus a spread.

The notes become redeemable on June 15, 2022, or within 90 days of a regulatory capital treatment event. The redemption price is par plus accrued dividends.

Proceeds will be used for general corporate purposes, including returning capital to shareholders.

Deals priced last week were meanwhile actively traded.

Public Storage’s $250 million of 5.15% series F cumulative redeemable preferreds were seen at $24.75 at the bell, a gain of a nickel.

Close to 538,000 shares traded during the session.

The deal came May 23, upsized from $100 million and tight to the 5.25% price talk.

BofA Merrill Lynch, Morgan Stanley, UBS and Wells Fargo ran the books.

The paper is trading under a temporary ticker symbol, “PBSPP.”

From May 24 business, Colony NorthStar Inc.’s $300 million of 7.15% series I cumulative redeemable preferreds closed 4 cents higher at $24.99.

The issue topped the day’s trading volume, with nearly 648,000 shares changing hands.

Like Public Storage, the size was increased from $100 million and the coupon came tight to the 7.25% talk.

BofA, J.P. Morgan Securities LLC, Morgan Stanley, RBC and UBS were the bookrunners.

Colony has a temporary ticker, “CLNYP.”

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