Kimco Realty prices new issue at tight end of talk; Farmland in the market; Annaly active

By Stephanie N. Rotondo

Seattle, Aug. 7 – Two new issues were added to the preferred stock calendar on Monday, both of which were from real estate investment trusts.

Kimco Realty Corp. announced – and priced – a $225 million offering of 5.125% class L cumulative redeemable preferreds.

The deal came at the tight end of the 5.125% to 5.25% price talk.

BofA Merrill Lynch, Morgan Stanley & Co. LLC, UBS Securities LLC and Wells Fargo Securities LLC ran the books.

The company said it would use proceeds for general corporate purposes, which could include the redemption of the 6% class I cumulative redeemable preferreds (NYSE: KIMPrI) and the 5.5% class J cumulative redeemable preferreds (NYSE: KIMPrJ).

Both of those issues were softening in the wake of the new issue.

The Is were off 25 cents at $25.16. The Js slipped a penny to $25.15.

Meanwhile, Farmland Partners Inc. said it was selling series B participating preferred stock.

Raymond James & Associates Inc. and Jefferies LLC are the bookrunners.

Proceeds from that offering will also be used for general corporate purposes.

That deal had not priced as of 6:30 p.m. ET.

As for the secondary, Annaly Capital Management Inc.’s 6.95% series F fixed-to-floating rate cumulative redeemable preferreds (NYSE: NLYPrF) continued to be busy, finally trading up above par.

The issue closed at $25.03, a gain of 7 cents, on 1.12 million shares traded.

The $700 million deal priced July 25. Since pricing, the issue is regularly seen among the most actively traded issues.

Fannie Mae’s 8.25% series S fixed-to-floating rate noncumulative preferreds (OTCBB: FNMAS) were also active, firming 16 cents, or 2.33%, to $7.02.

Though the 8.25% noncumulative preferreds (OTCBB: FNMAT) were not as active, they were also stronger, adding 18 cents, or 2.73%, to close at $6.78.

A market source noted that the gains came as the Federal Housing Finance Agency released the agencies’ stress test results.

“No surprise, they did not pass,” the source said. “After all, they have little capital.”

But the source added that the GSE-linked preferreds were up about 2.5% across the board.

“I think this is more ‘pie-in-the-sky’ thinking,” he said.

As it stands right now, Fannie and her sector peer Freddie Mac have a combined capital buffer of $600 million – a figure that, under the current conservatorship terms, will be reduced to zero in 2018. Though both agencies have been profitable in the last couple of years, the so-called “net worth sweep” requires that a bulk of the GSEs’ profits be put back to the Treasury by way of a dividend payment.

In the wake of the tests, however, those who have been pushing for the GSEs’ ability to build up more capital – mostly investors, although there are a few political allies as well – may use the data to back up their arguments.

Back in May, the FHFA head, Mel Watt, even noted to Congress that the current capital plan is not sustainable and indicated he may be open to building up a larger capital cushion.

But so far, housing finance reform has stalled and either side – those fighting for Fannie and Freddie to recapitalize and those looking to unwind both firms – have been moved to compromise only so far.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.