Health Care REIT debuts well; Altra a little higher; Old Republic, NorthStar deals on tap

By Rebecca Melvin

New York, March 2 - Health Care REIT Inc.'s newly priced 6.5% convertible perpetual preferred shares traded actively on their debut in secondary trading Wednesday, rising 1.75 points to 2 points to 51.75 bid, 52 offered after the $625 million deal priced at the rich end of talk, market sources said.

Health Care REIT also priced $1.23 billion of common stock at $49.25.

Altra Holdings Inc.'s newly priced 2.75% convertible senior notes were quieter, but also higher at 101.5, after the $75 million offering priced at the rich end of talk, sources said.

MetLife Inc. was on the verge of pricing $3 billion of mandatory convertible equity units a day ahead of schedule at fixed terms including a 5% coupon.

This deal, which was still not officially priced by Prospect News' deadline, was trading in the gray market at $83.5 to $84.5 versus a stock price of $44.00, which compared to where it was being marketed at $85 to $89 despite its $75 face, a syndicate source said.

The mandatories were being fit into the parameter of existing bonds done as a deal between MetLife and AIG back in November, the sources said.

The mandatory was pricing together with 146.8 million shares of common stock.

The well-recognized insurance company "is an easy name to justify to investors," a New York-based sellside trader said.

Also in the primary market, Old Republic International Corp. launched an offering of $250 million of seven-year convertible senior notes that it planned to price after the market close at talked terms of a 3.5% to 4% yield and a 30% to 35% premium.

And NorthStar Realty Finance LP, the operating partnership of NorthStar Realty Finance Corp., launched an offering of 20-year senior exchangeable notes that it planned to price after the market close Thursday. The paper was talked to yield 7% to 7.5% with an initial conversion premium of 18% to 22%.

Back in established issues, UDR Inc.'s 4% convertibles came in about 0.75 point after the Highlands Ranch, Colo.-based equity real estate investment trust, formerly called United Dominion Realty Trust Inc., called that $157 million of paper outstanding.

Health Care REIT up on debut

Health Care REIT's newly priced 6.5% perpetual preferred shares traded at 51.75 bid, 52 offered pretty consistently through the session, which was its debut in secondary market trading.

The new preferreds did very well, sellsiders said, especially when you remember that its 50 par means that the price rise was the equivalent of 103 bid, 104 offered for a conventional par bond, a New York-based sellside trader pointed out.

"I imagine it had appeal for outright accounts looking for big yield and low premium who aren't allowed to own the equity, which itself pays a very fat dividend," the sellsider said.

Another sellsider said that the convertible did well given how the stock reacted after a concurrent $1.23 billion offering of common stock, or 25 million shares at $49.25 per share.

Shares of the Toledo, Ohio-based self-administered equity real estate investment trust added a few cents to $50.87, but that was building on a secondary offering of common stock that came at a discount.

The convertibles have a greenshoe of $93.75 million.

The deal priced at the tight end of talk, which was for a yield of 6.5% to 7% and a 15% to 20% initial conversion premium.

The convertible preferreds were sold via joint bookrunners UBS Investment Bank, Bank of America Merrill Lynch, Barclays Capital Inc., Deutsche Bank Securities Inc., J.P. Morgan Securities LLC and Wells Fargo Securities.

The preferreds are non-callable for seven years and then provisionally callable if shares exceed 130% of the conversion price. There are no puts.

Proceeds from both registered, off-the-shelf offerings are earmarked to finance a portion of the purchase price of its previously announced acquisition of Genesis HealthCare Corp. for $2.4 billion.

If that acquisition is not completed, proceeds will be used for general corporate purposes, including investing in health care and senior housing properties and repaying borrowings under the company's unsecured line of credit and other outstanding debt.

The convertible preferreds have takeover protection.

Altra adds in quiet debut

Altra's newly priced 2.75% convertibles traded up about 1.5 points to 101.5, which was comparable to a 40-cent, or nearly 2%, addition to its underlying shares, which settled at $20.92.

Altra priced $75 million of 20-year convertibles after the market close Tuesday at par to yield 2.75% with an initial conversion premium of 35%, according to a news release.

The Rule 144A deal priced at the rich end of talk, which was for a 2.75% to 3.25% yield and a 30% to 35% initial conversion premium.

JPMorgan and Jefferies & Co. were the joint bookrunners, and there is a $10 million over-allotment option.

The bonds are non-callable until March 1, 2015 and then are provisionally callable for three years for cash plus a "make-whole premium," if shares exceed 130% of the conversion price. There are puts in years seven, 10 and 15.

There is takeover and dividend protection.

Proceeds will be used for the acquisition of Danfoss Bauer GmbH if and when the acquisition closes and for general corporate purposes.

Altra is an automotive parts supplier based in Quincy, Mass.

Old Republic to price

Old Republic, a Chicago-based insurance holding company, which is known to convertible players, launched a $250 million offering of seven-year convertible senior notes that was expected to price after the close.

The deal wasn't heard in the gray market, but it was expected to do well, a New York-based sellside trader said.

Old Republic plans to price the notes at a 3.5% to 4% yield, with an initial conversion premium of 30% to 35%, according to a market source.

There is a concurrent offering of $250 million of straight notes due 2021.

The registered convertibles, which have a $37.5 million greenshoe, will be non-callable for life, with cash dividend protection of $0.175 per quarter.

Proceeds of about $107.4 million will be used to repay debt that was assumed in connection with the acquisition of PMA. Remaining proceeds will be for general corporate purposes, including making additional capital contributions to insurance company subsidiaries that may be necessary.

Morgan Stanley and UBS are the bookrunners of the registered deal.

NorthStar to price

NorthStar launched a Rule 144A offering of $100 million of convertibles that was seen pricing after the market close on Thursday.

The deal, with a $15 million greenshoe, was being sold via JPMorgan and Citigroup as the joint bookrunners with FBR Capital Markets acting as a co-manager.

The notes will be non-callable for five years with puts in years five, 10 and 15.

The notes will be senior unsecured obligations of the operating partnership, exchangeable for cash, shares of NorthStar's common stock, or a combination of cash and shares of NorthStar's common stock, at the operating partnership's option.

NorthStar and NRFC Sub-REIT Corp., a subsidiary of the operating partnership, has guaranteed payment of amounts due on the notes.

Proceeds are earmarked to purchase or repay debt and for general corporate purposes.

New York-based NorthStar is a real estate investment trust that originates and invests in commercial real estate debt, real estate securities and net lease properties.

Mentioned in this article:

Altra Holdings Inc. Nasdaq: AIMC

Health Care REIT Inc. NYSE: HCN

MetLife Inc. NYSE: MET

NorthStar Realty Finance Corp. NYSE: NRF

Old Republic International Corp. NYSE: ORI

UDR Inc. NYSE: UDR

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