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Pebblebrook greenshoe lifts 1.75% convertibles add-on to $250 million
By Wendy Van Sickle
Columbus, Ohio, Feb. 9 – Underwriters for Pebblebrook Hotel Trust’s upsized $215 million add-on to its 1.75% convertible notes due Dec. 15, 2026 fully exercised their $35 million greenshoe, increasing the total size of the deal to $250 million, according to an FWP filing with the Securities and Exchange Commission.
The company priced $215 million of the convertibles after the market close on Thursday with a reoffer price of 105.5, as previously reported.
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.
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 $500 million of 1.75% convertible notes due 2026 that priced in December.
The conversion price for the notes will be $25.47, and the conversion rate will be 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 $257.2 million with the greenshoe exercised in full.
About $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.
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