Pebblebrook, Ares get temporary tickers; Reinsurance Group trading at a premium

By Stephanie N. Rotondo

Seattle, June 3 – Recently priced preferred stock issues were “jumping up,” a trader said, following a weak jobs report.

In its monthly report, the Labor Department said that U.S. nonfarm payrolls improved by only 38,000 jobs last month, marking the lowest increase in six years. The report also downwardly revised March and April figures by 59,000 jobs.

The unemployment rate dipped to 4.7%, though that was attributed to people discontinuing their job search.

As for new issues, Pebblebrook Hotel Trust’s $125 million of 6.375% series D cumulative redeemable preferreds – a deal priced Thursday – had freed to trade by mid-morning and was already assigned a temporary trading symbol.

The symbol is “PBBKP,” a trader said.

He pegged the issue at $24.90 in early trading. After the close, the preferreds were seen at $25.25.

From Wednesday’s business, Ares Management LP’s $275 million of 7% series A preferred units were also trading under a temporary symbol, “ARMGP.”

The units were pegged at $24.70 at mid-morning but jumped to $24.80 by the bell.

Also priced Wednesday, Reinsurance Group of America Inc.’s $400 million of 5.75% $25-par fixed-to-floating rate subordinate debentures due 2056 were seen trading “above $26,” according to a trader.

And from Tuesday, NextEra Energy Capital Holdings Inc.’s $500 million of 5.25% series K junior subordinated debentures due 2076 were quoted at $24.90 bid, $24.95 offered.

Colony, NorthStar to merge

Away from recent deals, Colony Capital Inc. and NorthStar Realty Finance Corp.’s preferreds were ticking higher after it was announced late Thursday that the entities – along with NorthStar Asset Management Group Inc. – would merge in an all-stock deal.

Colony’s 7.125% series C cumulative redeemable perpetual preferreds (NYSE: CLNYPC) were up 34 cents, or 1.44%, trading at $23.89. NorthStar Realty’s 8.25% series B cumulative redeemable preferreds (NYSE: NRFPB) were up 80 cents, or 3.31%, at $24.98.

The 8.75% series E cumulative redeemable preferreds (NYSE: NRFPE) had the biggest percentage gain of the NorthStar issues, rising 94 cents, or 3.92%, to $24.94.

“That’s interesting that the real estate investment trusts are going to start merging,” a trader said.

Shareholders will receive 33% to 34% of the new equity in the newly formed REIT, which will hold about $58 billion of assets combined.

Tom Barrack of Colony Capital will take over as chairman of the new company, Colony NorthStar Inc.

The merger is expected to result in cost savings of $115 million, $80 million of that in cash and $35 million in stock-based compensation.

Shareholders of NorthStar Asset Management will receive a special cash dividend of $128 million, or 68 cents per share, in addition to the regular dividend.

More moves in Fannie, Freddie

Fannie Mae and Freddie Mac once again dominated trading as the week came to a close.

The GSEs’ preferreds were also rising again, as the U.S. Judicial Panel on Multidistrict Litigation rejected the Federal Housing Finance Agency’s request to combine four separate lawsuits into one case based in Washington, D.C.

Fannie’s 8.25% series S fixed-to-floating rate noncumulative preferreds (OTCBB: FNMAS) gained a nickel, or 1.07%, to close at $4.72. Freddie’s 8.375% fixed-to-floating rate noncumulative perpetual preferreds (OTCBB: FMCKJ) added 8 cents, or 1.79%, to end at $4.60.

In its ruling issued Thursday, the panel said that the government failed to establish sufficient burden in dealing with each of the four cases on their own.

Had the panel ruled for the FHFA, the case would have likely gone to judge Royce Lamberth. Lamberth has previously ruled in favor of the government by dismissing one investor’s lawsuit.

That case, however, is being appealed, with a decision expected later this year. That ruling could be overturned following the release of unsealed documents in recent weeks by judge Margaret Sweeney of the Court of Federal Claims.

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