Gramercy Property sells upsized preferreds; RAIT’s 7.125% $25-par notes not yet freed

By Stephanie N. Rotondo

Phoenix, Aug. 12 – Preferred stocks continued to tick up in Tuesday trading and liquidity was “maybe marginally improved,” according to a market source.

The Wells Fargo Hybrid and Preferred Securities index finished up 14 basis points.

The primary market was spitting out smaller deals during the session. Gramercy Property Trust Inc. announced – and then priced – one such issue, an offering of series B cumulative redeemable perpetual preferred stock.

Initially, the deal was expected to be about $75 million at 7.25%, according to a trader. But the deal came upsized at $87.5 million and tightened to 7.125%.

BofA Merrill Lynch and Morgan Stanley & Co. LLC led the deal.

Prior to pricing, a trader had seen the issue at $24.60 bid in the gray market.

The company plans to use proceeds from the sale to redeem all of its outstanding 8.125% series A cumulative redeemable preferred shares (NYSE: GPTPA). Those shares ended the day up 2 cents at $25.37.

Red Mountain Resources Inc. also announced a new deal, though it had not priced by day’s end. The Dallas-based oil and gas company said it planned to sell 10% series A cumulative redeemable preferreds, the proceeds of which it will use to partially fund its fiscal 2015 development program.

The company held a conference call after the market closed to discuss the offering.

From Monday’s business, RAIT Financial Trust’s new $70 million issue of 7.125% $25-par senior notes due 2019, however, were holding where they had been at Monday’s close.

A trader quoted the issue in a $24.60 to $24.70 range early in the session and later said it was holding at $24.70.

He noted that the deal had yet to free from the syndicate.

The new issue priced Monday, coming upsized from $35 million. Initial price talk was around 7.25% but was then revised to 7.125%.

Deutsche Bank Securities Inc., Barclays, Keefe Bruyette & Woods and Credit Suisse Securities (USA) LLC were the joint bookrunners on the non-rated deal.

Still, liquidity remained thin as investors kept an eye on geopolitics and tried to take in the last few weeks of summer before back-to-school season.

Among recent deals that still have yet to list on any exchange, Northern Trust Corp.’s $400 million of 5.85% series C noncumulative perpetual preferred stock – a deal that priced July 29 – were active and better, ending up 3 cents at $24.44.

About 330,000 shares changed hands during the trading day.

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