Preferreds give up gains on modest volume; few details on American Homes deal; REITs firm up

By Stephanie N. Rotondo

Phoenix, April 2 - Preferred stock trading was muted as Wednesday's session began, a trader reported.

"Everything is just waiting on some deals of some kind," he said.

On Tuesday, American Homes 4 Rent announced plans to offer up to $115 million - including a $15 million greenshoe - of series C cumulative preferreds. However, the trader said he had yet to see any details aside from what the company said in its registration statement.

Morgan Stanley & Co. Inc., Raymond James & Associates and Jefferies are leading the deal.

Despite the lackluster volume, the preferred market was inching higher, as the Wells Fargo Hybrid and Preferred Securities index improved by 5 basis points as of mid-morning. The modest gains came on the back of a new ADP report that showed the private sector added 191,000 jobs in March, just slightly below the 195,000 jobs analysts polled by Reuters were expecting.

Additionally, ADP revised February's reading to an additional 178,000 jobs, versus the 139,000 jobs initially reported.

Also on the data front, U.S. factory orders saw a gain in February, despite inclement weather. Orders increased 1.6% during the month.

The firm tone of the market began to dissipate around lunchtime, however, even as the common equity markets stayed strong.

The Wells Fargo index finished the session down 16 bps, or about 4 cents on average for $25-par preferred shares.

And speaking of Wells Fargo, Wells Fargo & Co.'s 5.85% series Q fixed-to-floating rate noncumulative perpetual preferreds (NYSE: WFCPQ) again saw a massive day of trading in an otherwise subdued day.

The preferreds fell a penny to $24.92, with over 3.5 million shares being exchanged.

REITs on the rise

CBL & Associates Properties Inc.'s 7.375% series D cumulative redeemable preferreds (NYSE: CBLPD) were trading on the active side and better Wednesday.

The shares rose 15 cents to $25.15.

Investors are preparing for a conference call on April 11, in which the company will provide an update on its business outlook and a portfolio review.

The real estate investment trust is based in Chattanooga, Tenn.

Among other REITs, American Capital Properties Inc. has been active of late and Wednesday was no exception.

The company's 6.7% series F cumulative redeemable preferreds (Nasdaq: ARCPP) put on 2 cents to close at $22.80.

Early in the session, the New York-based company announced that it had added three new lenders to its corporate credit facility, bringing its total borrowing capacity to $3.15 billion, of which about $730 million is available to the company.

The new total capacity reflects a $275 million gain from the new lenders.

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