Morning Commentary: DuPont Fabros, Sunstone tap market; GATX frees; Public Storage plans new issue

By Stephanie N. Rotondo

Seattle, May 10 – The new issue calendar continued to push out preferred stock offerings on Tuesday.

DuPont Fabros Technology Inc. said it had sold $175 million of 6.625% series C cumulative redeemable preferreds. The deal was first announced on Monday, with price talk initially in a 6.75% to 7% range.

A trader said the issue had freed to trade early in the session, pegging the preferreds at $25.02 bid, $25.05 offered.

Stifel Nicolaus & Co. Inc., Raymond James & Associates Inc., Goldman Sachs & Co. and RBC Capital Markets LLC are the joint bookrunners. Co-managers include Robert W. Baird & Co. Inc., Credit Suisse Securities (USA) LLC, Evercore Group LLC, KeyBanc Capital Markets Inc. and TD Securities (USA) LLC.

Meanwhile, Sunstone Hotel Investors Inc. announced it priced a $75 million offering of 6.45% series F cumulative redeemable preferred stock.

Price talk on that paper was initially 6.5% to 6.625%.

Wells Fargo Securities LLC was the bookrunner.

A trader said he had yet to see any markets for the Sunstone preferreds.

“It basically seems like everyone is focusing on [DuPont Fabros and GATX Corp.],” he said. As for the latter, he was referring to the $150 million sale of 5.625% $25-par senior notes due 2066 that priced late Monday from the Chicago-based transportation company.

That issue had freed by early trading as well and was seen in a par to $25.08 context.

BofA Merrill Lynch and Morgan Stanley & Co. LLC ran the books.

The market also saw a new deal added to the calendar, as Public Storage said it was issuing series C cumulative preferreds.

A trader said he had yet to see any price talk on the deal, though he saw a $24.85 bid in the early gray market.

“I’m hearing it’s a small deal, tightly held,” he said. “It’s all going to be put away by the manager and there’s no selling group.”

BofA Merrill Lynch, Morgan Stanley & Co. LLC, UBS Securities LLC and Wells Fargo are the joint bookrunning managers.

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