Midday Commentary: REITs jump in to primary arena with new deals from Chesapeake, Colony

By Stephanie N. Rotondo

Phoenix, July 10 - The primary preferred stock market began kicking up Tuesday. Chesapeake Lodging Trust announced plans for a new issue, and Colony Financial Inc. said it will reopen its 8.5% series A cumulative redeemable perpetual preferreds.

Annapolis, Md.-based Chesapeake said in a regulatory filing that it will sell series A cumulative redeemable preferreds. A trader said the deal is expected to be about $75 million and is talked around 7.875%.

"It'll probably price today," he said, seeing a gray market quote for paper at par bid, $25.10 offered.

Wells Fargo Securities LLC, J.P. Morgan Securities LLC and RBC Capital Markets LLC are the joint bookrunners. The co-managers are Robert W. Baird & Co. Inc. and Deutsche Bank Securities Inc.

Proceeds will be contributed to the trust's operating partnership in exchange for series A preferred stock units. The operating partnership will then use the funds to repay outstanding amounts under a revolving credit facility and for other general corporate purposes.

Meanwhile, Santa Monica, Calif.-based Colony Financial said it will price an add-on to its 8.5% series A preferreds (NYSE: CLNYPA). Paper was trading up 6 cents at $25.76 at midday.

Barclays Capital Inc., Bank of America Merrill Lynch, Morgan Stanley & Co. LLC and UBS Securities LLC are the joint bookrunning managers. RBC and Stifel, Nicolaus & Co. Inc. are the co-managers.

Proceeds will be used to pay down the company's revolving credit facility. Any remaining funds will be used to acquire target assets and for working capital and general corporate purposes.

Colony's add-on follows a reopening of NorthStar Realty Finance Corp.'s 8.25% series B cumulative redeemable perpetual preferreds, which came late Monday.

The company sold an additional $70 million in the add-on. NorthStar initially sold $155 million of the preferreds on Feb. 7, 2007. Another $35 million were issued on May 24, 2007. NorthStar sold an additional $40 million preferreds on March 21 and registered on June 12 to sell up to $62.5 million of the preferreds in an at-the-market offering.

In the latest reopening, the preferreds were sold at $22.95 per share. The issue (NYSE: NRFPB) traded up 5 cents to the issue price in midday trading Tuesday.

NorthStar is a New York-based real estate investment trust.

© 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.