Home Properties prices $175 million 20-year exchangeables to yield 4.125%, up 18%

New York, Oct. 18 - Home Properties Inc. priced Wednesday after the close $175 million of 20-year exchangeable senior notes to yield 4.125% with an 18% initial exchange premium.

The deal came at the cheap end of talk, which was for a coupon of 3.875% to 4.125% and an initial exchange premium of 18% to 22%.

The exchange price is $73.34 and the ratio 13,6357.

The notes were issued by operating partnership Home Properties LP and exchangeable into common stock of the listed company.

There is an over-allotment option for a further $25 million.

Merrill Lynch is the bookrunner of the Rule 144A offering.

The notes are non-callable for the first five years and may be put in years five, 10 and 15.

There is a contingent conversion hurdle at 130% of the conversion price.

The notes will have full dividend protection via a conversion ratio adjustment and change-of-control protection in the form of a make-whole premium.

Home Properties, a Rochester, N.Y.-based real estate investment trust that focuses on residential apartment communities in the United States, said it will use about $58 million of the proceeds to concurrently buy back stock and another $70 million to repay an outstanding revolving loan. The rest of the proceeds will be used for general corporate purposes.

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