Public Storage plans sale of preferreds, performs well in gray market; Strategic Hotels mixed

By Stephanie N. Rotondo

Portland, Ore., March 5 - Preferred stocks began the week with a weaker tone, according to markets sources.

Two new deals were announced Monday, one from Public Storage and one from Murray Street Investment Trust I, a unit of Goldman Sachs Group Inc. The Murray deal was not attracting much attention, but the Public Storage deal was "going pretty well," a trader reported.

In the secondary realm, a trader said the space was on the quiet side, and another market source noted that volume was light.

Strategic Hotels & Resorts Inc. was reasonably busy and mixed on the day. There was no fresh news out on the hotel and resort-focused real estate investment trust.

Public Storage plans new deal

Glendale, Calif.-based real estate investment trust Public Storage announced plans to sell cumulative preferreds shares of beneficial interest, series T, on Monday.

The preferreds will be issued as depositary shares representing 1/1,000th of an interest in the preferreds. The price is $25 per depositary share.

A trader said price talk was around 5.75%.

"It's going pretty well," he said. "It seems to be pretty liquid. They'll probably grow it."

The trader added that investors tend to like Public Storage deals, adding that the 5.9% series S cumulative preferreds - a $400 million deal that priced Jan. 5 - was "at a premium on a 5.75% yield" right out of the hopper.

"People can't get enough Public Storage for some reason," he said.

He saw the proposed issue at $24.65 bid in the gray market shortly before the close, noting that he had seen bids as high as $24.80.

At another desk, a source said the deal was "going OK but not great."

He quoted the paper at $24.75 bid, $24.80 offered at the close.

Bank of America Merrill Lynch, Morgan Stanley & Co. LLC, UBS Securities LLC and Wells Fargo Securities LLC are the joint bookrunning managers.

Proceeds will be used to make investments in self-storage facilities and in entities that own self-storage facilities, to redeem preferred securities and for other general corporate purposes.

Strategic Hotels ends mixed

Strategic Hotels' preferreds were on the active side and mixed in Monday trading.

The 8.5% series A cumulative redeemable preferreds (NYSE: BEEPA) were the most active, gaining 54 cents, or 1.76%, to end at $31.24.

However, the 8.25% series B cumulative redeemable preferreds (NYSE: BEEPB) dropped a nickel to $30.30, while the 8.25% series C cumulative redeemable preferreds (NYSE: BEEPC) declined 85 cents, or 2.72%, to $30.45.

There was no fresh news out to act as catalyst.

The REIT is based in Chicago.

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