National Storage prices first preferred issue; Hoegh, Spirit Realty trade up; GSEs firm

By Stephanie N. Rotondo

Seattle, Oct. 3 – The preferred stock new issue market continued to see deals flowing out of the pipeline on Tuesday.

National Storage Affiliates Trust brought a $150 million offering of 6% series A cumulative redeemable preferreds, marking the company’s first entry into the preferred stock arena.

The deal came at the tight end of the 6% to 6.125% price talk.

Wells Fargo Securities LLC, Morgan Stanley & Co. LLC and Jefferies LLC are the joint bookrunners.

The Greenwood Village, Colo.-based real estate investment trust will contribute proceeds to its operating partnership in exchange for series A preferred units. The operating partnership will then use the funds to repay borrowings outstanding under a revolving credit facility.

Among other recently priced deals, Hoegh LNG Partners LP’s 8.75% series A cumulative redeemable preferred units were trading actively, adding 45 cents, or 1.8%, to close at $25.50.

The $100 million deal came Sept. 28 at the tight end of the 8.75% to 8.875% price talk.

Morgan Stanley, UBS Securities LLC and Stifel Nicolaus & Co. Inc. ran the books.

The issue has a temporary ticker, “HGLPF.”

Spirit Realty Capital Inc.’s 6% series A cumulative redeemable preferreds were also busy and better.

The preferreds firmed 2 cents to $25.02.

The issue priced Sept. 27 via Morgan Stanley, BofA Merrill Lynch and Wells Fargo. Its temporary ticker is “SPRYP.”

Freddie, Fannie gain ground

GSE-linked preferreds continued to trade actively on Tuesday, as the market waited to see what Mel Watt, head of the Federal Housing Finance Agency, would say before the House Financial Services Committee.

Freddie Mac’s 8.375% fixed-to-floating rate noncumulative preferreds (OTCBB: FMCKJ) were up a dime, or 1.45%, at $6.83. Fannie Mae’s 8.25% series S fixed-to-floating rate noncumulative preferreds (OTCBB: FNMAS) were up 9 cents, or 1.3%, at $6.99.

Fannie’s variable rate series P noncumulative preferreds (OTCBB: FNMAH) closed up 4 cents at $5.58.

As was expected, Watt once again reiterated that the mortgage guarantors need to be allowed to build up a capital buffer. Fannie and Freddie are allowed to have a very small capital cushion, though that number is set to hit zero in 2018.

Furthermore, Watt urged Congress to take action on housing reform sooner than later.

“Like any business, the enterprises need some kind of buffer to shield against short-term operating losses,” Watt said in his testimony. “In fact, it is especially irresponsible for the enterprises not to have such a limited buffer because a loss in any quarter would result in an additional draw of taxpayer support and reduce the fixed dollar commitment the Treasury Department has made to support the enterprises.”

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