By Abigail W. Adams
Portland, Me., Feb. 5 – Pebblebrook Hotel Trust priced an upsized $215 million add-on to its 1.75% convertible notes due Dec. 15, 2026 after the market close on Thursday with a reoffer price of 105.5, according to an FWP filing with the Securities and Exchange Commission.
Pricing came richer than initial talk for a reoffer price of 104.5 to 105, according to a market source.
BofA Securities Inc., Raymond James & Associates, Wells Fargo Securities, LLC and Truist Securities Inc. were bookrunners for the registered offering, which carries an upsized greenshoe of $35 million.
The initial size of the offering was $175 million with a greenshoe of $25 million.
The notes will carry the same terms and form a single series with the company’s 1.75% convertible notes due 2026.
Pebblebrook priced a $500 million issue of the 1.75% notes in December.
The conversion price for the notes will be $25.47, and the conversion rate 39.2549.
The convertibles are non-callable until Dec. 20, 2023 and then subject to a 130% hurdle.
The notes are putable upon a fundamental change.
The notes will be settled in cash, shares or a combination of both at the company’s option.
In connection with the offering, the company entered into capped call transactions with a cap price of $33.0225.
Net proceeds are expected to be $221.1 million or will be $257.2 million if the greenshoe is exercised in full.
Approximately $18 million of the net proceeds will be used to cover the cost of the call spread with the remaining amount to be used to pay down debt, including outstanding amounts under the company’s unsecured revolving credit facility and term loans.
Pebblebrook is a Bethesda, Md.-based real estate investment trust focusing on urban and resort lifestyle hotels.
| Issuer: | Pebblebrook Hotel Trust
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| Securities: | Convertible senior notes
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| Amount: | $215 million add-on
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| Greenshoe: | $35 million
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| Maturity: | Dec. 15, 2026
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| Bookrunners: | BofA Securities Inc., Raymond James & Associates, Wells Fargo Securities, LLC and Truist Securities Inc.
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| Co-managers: | U.S. Bancorp Investments, Inc., PNC Capital Markets LLC (leads), Capital One Securities Inc., Regions Securities LLC, BMO Capital Markets Corp., Scotia Capital (USA) Inc., SMBC Nikko Securities America Inc. and TD Securities (USA) LLC
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| Coupon: | 1.75%
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| Price: | 105.5
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| Conversion price: | $25.47
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| Conversion rate: | 39.2549
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| Call options: | Non-callable until Dec. 20, 2023 and then subject to a 130% hurdle
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| Put options: | Upon a fundamental change
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| Pricing date: | Feb. 4
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| Settlement date: | Feb. 9
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| Distribution: | Registered
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| Talk: | Reoffer price of 104.5 to 105
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| Stock symbol: | NYSE: PEB
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| Market capitalization: | $2.63 billion
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| Initial offering: | $500 million issue of 1.75% notes due 2025 priced in December 2020
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