Public Storage brings upsized new deal; Cedar Realty Trust prices add-on to 7.25% preferreds

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 priced its offering of series V cumulative preferreds late in the day, bringing $450 million of the 5.375% shares.

"It's selling very well," a trader said.

Meanwhile, Cedar Realty Trust Inc. brought a $105 million reopening of its 7.25% series B cumulative redeemable perpetual preferred shares.

The shares were sold at a 5.2% discount to Monday's closing share price and ended Tuesday even weaker.

Sources reported that the fourth quarter is expected to be active for new issues. On Tuesday, a trader said that he heard 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.

Public Storage brings new deal

Public Storage priced $450 million of 5.375% series V cumulative perpetual preferred shares of beneficial interest on Tuesday.

The deal came at the low end of talk and was upsized from $200 million.

A trader said the issue was doing well ahead of pricing, 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 also noted that he was "hearing that certain funds didn't get their full allocations."

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

The preferreds are redeemable on or after Sept. 30, 2017.

The Glendale, Calif.-based real estate investment trust will apply to list the new series of preferreds on the New York Stock Exchange under the ticker symbol "PSAPV."

Proceeds will be used to redeem all outstanding 6.45% series X cumulative preferreds and all 6.45% series F cumulative preferreds. Any remaining funds will be used for general corporate purposes, which might include investments in self-storage facilities and the redemption of other preferred issues.

The Xs (NYSE: PSAPX) ended at $25.21 on Monday. The Fs (NYSE: PSAPF) dropped 23 cents to $25.10 on Tuesday.

Cedar Realty prices add-on

Cedar Realty launched a $105 million reopening of its 7.25% series B cumulative redeemable perpetual preferred shares.

The preferreds were priced at $23.9366 per share, a 5.2% discount to Monday's closing share price of $25.20.

The issue (NYSE: CDRPB) closed down $1.30, or 5.16%, at $23.90.

Bank of America Merrill Lynch and Wells Fargo are the joint bookrunning managers. The joint lead managers are Raymond James & Associates Inc., RBC and Stifel Nicolaus & Co. Inc.

Proceeds will be contributed to the 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) closed down 12 cents, or 0.47%, at $25.22.

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

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