Midday Commentary: Public Storage expected to price late Tuesday; Cedar Realty planning add-on

By Stephanie N. Rotondo

Phoenix, Sept. 11 - Investors continued to hunt for yield on Tuesday, which was giving preferred stocks a bit of a boost.

"Our stuff still appears to be at the cheaper end of the market," a trader said.

Public Storage had yet to price its planned offering of series V cumulative preferreds. However, a trader said the deal was expected to come later in the session, with $450 million of preferreds being priced at 5.375%.

"It's selling very well," he said, seeing the issue at $24.60 bid in the gray market. "Once they price, that's when you'll see people get more active in it."

He was "hearing that certain funds didn't get their full allocations."

The Glendale, Calif.-based real estate investment trust intends to use proceeds from the offering to redeem its 6.45% series F cumulative preferreds. That issue (NYSE: PSAPF) closed at $25.10 on Monday.

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

Cedar Realty to reopen

Meanwhile, Cedar Realty Trust Inc. said it will reopen its 7.25% series B cumulative redeemable perpetual preferred shares.

The preferreds are listed on the New York Stock Exchange under the ticker symbol "CDRPB." There are 599,402 of the $25-par preferreds outstanding.

The issue closed at $25.20 on Monday and was trading down $1.33, or 5.27%, at $23.87 as of midday on Tuesday.

Dividends are payable quarterly. The next distribution will be Nov. 20.

The preferreds are redeemable on or after May 22, 2017 or in the event of a change of control.

Bank of America Merrill Lynch and Wells Fargo are the joint bookrunning managers. The joint lead managers are Raymond James & Associates Inc., RBC Capital Markets LLC and Stifel Nicolaus & Co. Inc. The co-managers are Credit Suisse Securities (USA) LLC and MLV & Co.

Proceeds will be contributed to the company's operating partnership in exchange for preferred units of limited partnership interest. The operating partnership will use the funds to redeem the 8.875% series A cumulative redeemable preferreds.

The As (NYSE: CDRPA) were trading down 12 cents at $25.22 as of midafternoon.

Cedar Realty is a Port Washington, N.Y.-based REIT.

Sources reported that the fourth quarter is expected to be active in new issues. On Tuesday, a trader said that he was hearing a "big deal" was being planned for a Wednesday launch, though he had not heard who the issuer was. He speculated that it could be a bank.

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