Hersha prices $75 million preferreds; primary market sleepy; traders see modest volume

By Andrea Heisinger

New York, Feb. 25 - Hersha Hospitality Trust tapped the preferred stock market Monday to help fund the company's planned redemption of its series A preferred shares as trading volume in the broader market was moderate to start the week.

Real estate investment trust Hersha Hospitality sold $75 million of 6.875% series C cumulative redeemable perpetual preferred stock at par of $25.00, an informed source said.

The preferreds were talked in the 7% area, the source said.

There was no trading seen in the shares at midday, a trader said, adding that "I can't imagine that will trade well." Another trader said they saw a $24.80 bid on the shares in late morning.

"It's really quiet," he added. "There's no selling group."

The investors were expected to be all institutional, the trader said at midday.

Wells Fargo Securities LLC was 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 preferreds on the New York Stock Exchange under the symbol "HT PRC."

Other than the Hersha issuance, 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.

By the close volume was "up for the day but still quite light," a trader said.

The market had given back some of its gains as equities took a hit by day's end on news about Italian Senate elections and a corresponding drop in the euro.

The day closed off about 9 bps, or 2 cents to 3 cents per share, the trader said.

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."

A source said in afternoon trading that "there is really nothing else going on in the gray market since nothing priced last week."

Among Monday's most active preferred issues in trading were a Credit Suisse Group (Guernsey) V Ltd. series P which saw 998,000 shares trade, ending off 1 cent on the day at $25.54. The company had announced a call on shares, which caused the jump in trading, a source said.

A Wells Fargo & Co. 5.125% series O preferred was seen with volume of 344,000 shares, ending up 15 cents on the day at $25.42.

Coming in behind the Wells Fargo's preferred shares in volume was JPMorgan Chase & Co.'s 5.5% series D, which saw 325,000 shares trade, off 1 cent on the day at $25.06.

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