Reckson prices upsized $250 million convertibles to yield 4%, up 25%

New York, June 21 - Reckson Associates Realty Corp. priced an upsized $250 million of exchangeable senior debentures after the close Tuesday to yield 4% with a 25% initial conversion premium.

The deal, increased from $200 million, came at the cheap end of talk, which had put the coupon between 3.75% to 4% and the initial conversion premium at 25% to 27%.

Citigroup Global Markets Inc. is the sole bookrunner for the transaction.

There is a $37.5 million greenshoe.

The exchange ratio is 24.6124 and the exchange price $40.63.

Ahead of the pricing, a New York-based sellside analyst put the deal slightly rich at the midpoint of talk. It looked about 0.34% rich, using a credit spread of 75 basis points over Libor and a stock volatility spread of 17%, the analyst said.

The 20-year senior bonds are non-callable for five years, with puts in years five, 10, and 15.

The issue has a conversion ratio adjustment for dividend increases, a syndicate source said.

The deal is being issued by Reckson Operating Partnership LP, but will be exchangeable into the stock of Reckson Associates Reality, a real estate investment trust, the source said.

The Melville, N.Y.-based company intends to use net proceeds to repay short-term floating-rate debt.

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