Preferreds decline amid low liquidity; American Realty’s executive departures eyed

By Stephanie N. Rotondo

Phoenix, Dec. 15 – The preferred stock market closed weaker Monday after trending higher in early dealings.

The Wells Fargo Hybrid and Preferred Securities index ended down 26 basis points. The index was up 8 basis points at mid-morning and had been up as much as 12 bps earlier in the session.

A trader said liquidity was dwindling, likely as players prepare for the upcoming holidays.

“Everything’s just kind of hanging around,” he said, adding that he had yet to hear of any new issues for the week.

In deals from the previous week, TravelCenters of America LLC’s $120 million of 8% $25-par senior notes due 2029 – a deal priced Tuesday – was even quieting down, the trader said.

“It’s not trading really,” he said, seeing a $24.60 bid early in the day. However, he noted that the paper had been trading around $24.80 on Friday and opined that “it’s probably hanging around that same area.”

In secondary dealings, Goodrich Petroleum Corp.’s 9.75% series D cumulative preferreds (NYSE: GDPPD) were initially moving up and oil prices were mixed.

Oil prices eventually fell, with West Texas Intermediate crude hitting a fresh five-and-a-half-year low.

The Goodrich preferreds finished the session off 17 cents, or 2.11%, at $7.90. The preferreds were up 42 cents, or 5.2%, at $8.49 earlier in the day.

Overall, however, the oil and gas space was mixed.

Vanguard Natural Resources LP’s 7.625% series B cumulative redeemable preferred units (Nasdaq: VNRBP), for instance, closed 27 cents, or 1.7%, higher at $16.18.

WTI crude fell $2.60, or 4.5%, to $55.21 per barrel. Brent crude declined $1.40, or 2.26%, to $60.45.

American Realty departures

American Realty Capital Properties Inc.’s 6.7% series F cumulative redeemable preferreds (Nasdaq: ARCPP) were under pressure Monday as the company announced its top three executives had resigned.

The preferreds closed at $21.38, off 52 cents, or 2.37%.

Nicholas Schorsch, executive chairman and director, left his post, the New York-based real estate investment trust said in a statement on Friday. Schorsch was a co-founder of the company and formerly its chief executive officer.

Also leaving were David Kay and Lisa Beeson, CEO and chief operating officer, respectively.

The exits came just mere months after the company reportedly discovered intentional accounting errors that then resulted in the departures of its chief financial and chief accounting officers.

For his part, Kay had maintained to investors after the disclosure that he had no plans to leave the company.

No specific reason was given for the latest round of resignations.

American Realty hopes that investors will look on the exits as a positive, as the REIT looks to move forward with its strategy.

Along with the management moves, American Realty plans to undo all of its relationships with entities linked to Schorsch.

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