Bluerock Residential, Eagle Point on tap; National Retail frees; Fannie, Freddie improve

By Stephanie N. Rotondo

Seattle, Oct. 5 – The preferred stock primary market saw two deals added to the calendar on Wednesday, as Bluerock Residential Growth REIT Inc. announced plans to sell series D cumulative preferreds and Eagle Point Credit Co. Inc. said it was offering $25 million of series B term preferreds due 2026.

Price talk on the Bluerock deal is 7%, according to a market source.

A trader saw the issue at $24.68 bid, $24.85 offered in the gray market.

Janney Montgomery Scott LLC, D.A. Davidson & Co. and Oppenheimer & Co. are leading the deal.

Proceeds will be used for future multifamily acquisitions and investment and for other general corporate and working capital purposes. That may include capital expenditures.

As for the Eagle Point deal, there is a $3.75 million greenshoe.

Keefe Bruyette & Woods Inc. is the bookrunner. FBR Capital Markets & Co. and Wunderlich Securities Inc. are co-lead managers. MUFG and National Securities Corp. are co-managers.

Proceeds will be used for investments in accordance with the firm’s objectives and strategy and for general working capital purposes.

Neither issue had priced as of press time.

From Tuesday’s business, National Retail Properties Inc.’s $300 million of 5.2% series F cumulative redeemable preferreds freed to trade as of 10:30 a.m. ET, a source reported.

The securities ended the day at $25.02, according to a market source. However, he said that the volume weighted average price of $24.97 was likely more accurate, considering that the paper was trading in a $24.94 to $24.95 context on Tuesday.

At mid-morning, a trader said “$24.90 is where they’ve been trading all around.”

Initial price talk was 5.25%. Wells Fargo Securities LLC, BofA Merrill Lynch and Morgan Stanley & Co. LLC ran the books.

From last week’s business, City Office REIT Inc.’s $100 million of 6.625% series A cumulative redeemable preferred stock was admitted to the New York Stock Exchange on Wednesday.

The ticker symbol is “CIOPA.” The deal came Sept. 27 at the midpoint to the 6.5% to 6.75% price talk.

The preferreds were trading at $24.79, down from opening levels of $24.82.

In the established secondary, a trader said Fannie Mae and Freddie Mac preferreds were pushing up on news “[president Barack] Obama can’t hide all these presidential papers that he wanted to try to hide,” a trader said.

The trader was referring to a decision from judge Margaret Sweeney of the Court of Federal Claims that will force the disclosure of some 11,000 government documents – all of which the government had been trying to shield under executive privilege.

“A lot of the GSE preferreds were trading,” a source said, adding that the gains were “overblown.”

Fannie, Freddie jump

Fannie and Freddie preferreds got a sizable pop on Wednesday as investors reacted – or “way overreacted,” as one source put it – positively to news that judge Sweeney of the Court of Federal Claims had sided with shareholders fighting the government’s net worth sweep.

In early trades, Fannie’s 8.25% series S fixed-to-floating rate noncumulative preferreds (OTCBB: FNMAS) were up 16 cents, or 4.28%, at $3.90. By the bell, the paper had jumped 48 cents, or 12.83%, to $4.22.

Fannie’s 8.25% series T noncumulative preferreds (OTCBB: FNMAT) were meantime up 56 cents, or 15.38%, at $4.20.

As for Freddie’s 8.375% fixed-to-floating rate noncumulative preferreds (OTCBB: FMCKJ), they improved 48 cents, or 13.26%, to $4.10.

All of the issues were among the day’s biggest percentage gainers.

Sweeney’s decision was unsealed late Monday. In it, she ordered the U.S. Treasury Department to turn over 11,000 documents that had previously been held back.

The agency attempted to keep the documents away from the court, invoking various privilege arguments.

The documents in question are in relation to the government’s 2012 decision to commandeer nearly all of the GSEs’ profits. Allegedly, the documents explain why the Treasury, the Federal Housing Finance Agency and the White House chose in favor of the net worth sweep.

Bruce Berkowitz of Fairholme Funds – and one of the plaintiffs in the case – hailed the decision, saying that Sweeney “astutely recognized” that the public had the right to know what its government was doing.

Still, one market source said he believed the massive gains seen in the GSEs was an overreaction, though he did concede that it was modestly positive for shareholders.

He also noted that the gains came “not on the heaviest volume.”

“We’ve definitely seen more [volume] on less news,” he said.

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