Spirit Realty Capital brings first preferred stock issue; Investors Real Estate prices

By Stephanie N. Rotondo

Seattle, Sept. 26 – The preferred stock primary market continued to see new issues come to market on Tuesday.

Spirit Realty Capital Inc. brought a $150 million offering 6% series A cumulative redeemable preferreds after the close.

The deal came in line with price talk. The sale marks the company’s first entry into the world of preferred stock.

At day’s end, a market source pegged the paper at $24.92 bid, $24.95 offered in the gray market.

A trader said the paper was bid for at $24.65 in the early gray market, though he added that there were “no real offers” for the preferreds.

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

The company plans to use proceeds to pay down its revolving credit facility.

Elsewhere in the REIT realm, Investors Real Estate Trust announced the pricing of its series C cumulative redeemable preferreds ahead of the open.

The deal was first announced on Monday.

The company sold $100 million of the preferreds at par to yield 6.625%. That was in the middle of the 6.25% to 6.75% price talk.

The issue freed to trade around midday, getting a temporary ticker of “IRRTP.”

The preferreds finished the day at $24.75, with about 2.08 million shares trading during the session.

The issue clearly dominated the day’s trading in terms of volume.

At mid-morning, a trader quoted the issue at $24.65 bid, $24.70 offered.

BMO Capital Markets and Raymond James & Associates Inc. were the bookrunners.

From Monday’s business, Federal Realty Investment Trust’s $150 million of 5% series C cumulative redeemable preferreds freed to trade Tuesday afternoon.

Its temporary ticker is “FDDRP.”

The preferreds were quite active, trading about 1.13 million times.

The issue ended the day at par. The preferreds were pegged at $24.70 bid, $24.75 offered at mid-morning.

The issue priced tighter than the 5.125% price talk and was upsized from $100 million.

BofA Merrill Lynch, UBS Securities LLC and Wells Fargo were the joint bookrunners.

Horizon on deck

There was another deal added to the calendar on Tuesday as well, a $30 million offering of $25-par notes due 2022 from Horizon Technology Finance Corp.

“There has been no gray trading on this today, only bids and no offers,” a market source said. “So when it does free, I suspect it will trade up.”

While pricing was expected after Tuesday’s close, details were not available as of 5:30 p.m. ET.

Price talk on the issue is 6.25%.

Keefe Bruyette & Woods is the bookrunner. BB&T Capital Markets, William Blair & Co., Janney Montgomery Scott LLC and Oppenheimer & Co. are co-managers.

The notes become redeemable on Sept. 15, 2019 at par plus accrued interest.

The new securities will be listed on the New York Stock Exchange.

Proceeds will be used to redeem the company’s 7.375% $25-par notes due 2019 (NYSE: HTF).

Those notes finished Tuesday’s session at $25.14, down 28 cents, or 1.11%.

Horizon is a Farmington, Conn.-based specialty finance company.

GSEs, Georgia Power busy

As for the more established secondary space, Fannie Mae and Freddie Mac continued to be actively traded, despite a lack of news to act as a catalyst.

One source opined that perhaps the federal budget process was the driving factor in the GSEs’ activity, though even he doubted that was the case.

Even so, Fannie’s 8.25% series S fixed-to-floating rate noncumulative preferreds (OTCBB: FNMAS) were up 6 cents at $7.07.

About 1.37 million of the preferreds changed hands.

Freddie’s 8.375% fixed-to-floating rate noncumulative preferreds (OTCBB: FMCKJ) were meantime down 3 cents at $6.90.

About 1.64 million of those preferreds were exchanged.

Meanwhile, Georgia Power Co.’s $270 million of 5% $25-par series 2017A junior subordinated notes due Oct. 1, 2077 (NYSE: GPJA) continued to climb above par, rising 3 cents to $25.10.

The deal priced Sept. 18 and listed on the NYSE on Monday.

BofA Merrill Lynch, Morgan Stanley, UBS and Wells Fargo were the bookrunners.

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