Preferred market ends session mixed; Pebblebrook Hotel Trust prices $125 million new deal

By Stephanie N. Rotondo

Portland, Ore., March 8 - The preferred stock market was "generally speaking, mixed" on Tuesday, according to a market source.

"Part of the problem" was a lack of any news to drive the market, he said. "Therefore it tends to not drive a lot of movement. It was status quo."

Pebblebrook Hotel Trust priced a new issue early in the session. It hadn't yet broke for free trading, though it was being quoted in the gray market below issue price.

Bethesda, Md.-based Pebblebrook Hotel Trust priced a $125 million issue of 7.875% perpetual series A cumulative preferred stock on Tuesday, coming in at the low end of price talk.

The preferreds were priced at par of $25.

In the gray market, the preferreds were being quoted at $24.90 bid, $24.95 offered, a market source said.

"For what it is, it's OK," the source said of the deal. "It's a small deal."

Because of the issue's smaller size, the source didn't expect the preferreds to see much action once they broke for free trading.

"That's one of the problems with retail [investment trusts] in general," he said, noting that those deals are typically smaller. On top of that, Pebblebrook is "not exactly well known."

Wells Fargo Securities LLC was active bookrunner, and Bank of America Merrill Lynch and Raymond James & Associates were passive.

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