Midday Commentary: Hersha Hospitality on tap; preferreds mixed in moderate trading volume

By Andrea Heisinger

New York, Feb. 25 - Hersha Hospitality Trust announced a new $25-par preferred stock offering Monday that it will use to redeem its series A preferred stock, as trading volume in the broader market was moderate to start the week.

Real estate investment trust Hersha Hospitality is expected to price $65 million of perpetual series C cumulative redeemable preferred stock later on Monday, an informed source said.

The preferreds will price at par of $25.00 and are being talked in the 7% area, the source said.

There was no trading seen of the preferreds at midday, a trader said, adding that "I can't imagine that will trade well."

The investors are expected to be all institutional, the trader said.

Wells Fargo Securities LLC is the active bookrunner.

Proceeds will be contributed to the operating partnership in exchange for preferred partnership interest and to redeem series A preferred shares.

The Harrisburg, Pa.-based company plans to list the new preferreds on the New York Stock Exchange under the symbol "HT PRC."

Other than the new offering, there was little activity in the preferred market.

Trading was moderate, "not heavy, not light," one source said. The market was up a touch - 3 cents or 12 basis points - at midday on mixed, slightly busier trading.

The slow trickle of issuers after a huge influx in January is set to increase, the source said.

"It [the new issue market] will come back," he said. "There's a huge demand for issuers."

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