Midday Commentary: E-House extends gains after strong earnings; American Realty adds dollar neutral

By Rebecca Melvin

New York, May 21 - E-House (China) Holdings Ltd. shares were extending gains early Wednesday after jumping 13% on Tuesday, and the convertible bonds of the Shanghai-based real estate services company were quoted up, according to market sources.

E-House's 2.75% convertibles due 2018 were quoted at 93.5 bid, 94.25 offered versus an underlying share price of $9.50.

On Tuesday, the bonds were indicated to have risen to 91.5 bid, 92 offered from 86.5 bid, 87 offered.

E-House shares hit $10.00 early Wednesday before peeling back a bit as they continue to react to strong earnings for the three months ending in March. Profit came in at 8 cents per share, which was double what analysts were expecting, and revenue was up 40% from the year-earlier period to $163.3 million, which was better than estimates.

E-House priced the downsized $135 million of convertible senior notes at a discount to par of 97.5 in December when the underlying shares were about $13.80.

American Realty Capital Properties Inc.'s convertibles were trading actively early Wednesday and were higher on a dollar-neutral, or hedged, basis as shares of the New York-based real estate investment company dipped on news that it is offering 100 million shares of common stock after the market close, a New York-based trader said.

The REIT, which has mostly single-tenant properties in its asset portfolios, is also planning to sell its multi-tenant shopping center portfolio to affiliates of Blackstone Real Estate Partners VII for $1.98 billion.

Both of the American Realty convertible bonds were up a point on a dollar-neutral basis with the stock down 4%, the trader said.

American Realty's 3% convertible due 2018, which was the more actively traded issue, according to Trace data, was seen having changed hands at 103.3. That was essentially little changed on an outright basis.

American Realty's 3.75% convertibles due 2020 traded at 105, which was down on an outright basis from 105.25 bid, 105.5 offered on Tuesday.

Shares were last down 3% at $12.39.

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