Campus Crest announces plans for new deal; Realty Income performing well; RBS paper rising

By Stephanie N. Rotondo

Portland, Ore., Feb. 1 - Preferred stocks began February by "moving up a little bit at a time," a trader said Wednesday.

"The market was up today on moderate volume," said another market source.

In the new issue market, Campus Crest Communities Inc. announced plans to price preferreds. A trader said that it is a "tiny deal" and that it would likely price Thursday.

Recent deals were doing better, including Realty Income Corp.'s $325 million 6.625% monthly income class F cumulative redeemable preferreds.

Away from recent deals, Royal Bank of Scotland Group plc paper continued to be active, and it managed to gain a bit of ground during the session. The preferred stock has been on a tear recently, as many believe that certain issues could start paying dividends in the near future.

Campus Crest bringing new deal

Campus Crest Communities, a Charlotte, N.C.-based real estate investment trust focused on student housing, will sell series A cumulative redeemable perpetual preferred stock.

The preferreds have a liquidation preference of $25 each. Price talk is around 8.375%, according to a trader, and the size of the deal is just 2 million preferreds.

"It's a tiny deal," he said. "There won't be a selling group, I am assuming."

The trader added that he expects pricing to occur on Thursday.

Dividends are payable quarterly, and the preferreds can be redeemed on or after February 2017 at par plus accrued dividends.

There is also a change-of-control clause that allows holders to convert the preferreds into common stock.

The company intends to list the preferreds on the New York Stock Exchange under the symbol "CCGPA."

Proceeds will be contributed to the company's operating partnership in exchange for series A cumulative redeemable preferred units. The operating partnership will use the funds to repay debt under two construction loans, to reduce borrowings under a senior unsecured revolving credit facility and for other general corporate and working capital purposes.

Realty Income faring well

Realty Income's $325 million issue of 6.625% monthly income class F cumulative redeemable preferreds was moving up, market sources reported.

One trader placed the issue at $24.85 shortly before the bell. After the market closed, a source said he saw the paper offered at $24.89.

The deal priced Tuesday and was upsized from $150 million.

Dividends are payable monthly. The preferreds can be redeemed beginning Feb. 15, 2017 at the company's option.

The Escondido, Calif.-based REIT intends to list the preferreds on the New York Stock Exchange. Settlement is expected Feb. 7.

Proceeds will be used to redeem Realty Income's class D preferreds. Remaining funds will be used to repay borrowings under the company's $425 million acquisition credit facility.

Among REITs trading in the secondary market, PS Business Parks Inc.'s 7.2% series M cumulative redeemable preferreds (NYSE: PBSPM) fell a penny to $25.20 in active trading.

On Jan. 12, the Glendale, Calif.-based REIT said it will redeem the Ms on Feb. 17.

Also, Regency Centers Corp.'s 7.4% series C preferreds (NYSE: REGPC) climbed up 21 cents to $25.57.

RBS wins again

Royal Bank of Scotland's 7.25% series T noncumulative dollar preference shares (NYSE: RBSPT) continued to be an actively traded issue after Barclays' recent recommendation of the paper.

The issue gained 42 cents, or 2.44%, to end at $17.62.

"They've been up significantly in the past few weeks," a source said. From the beginning of 2012, the shares have earned 38% of their value back.

"Just think if you could annualize that," the source said. "That's an impressive recovery."

As previously reported, Barclays recently highlighted the issue and others under the RBS umbrella that will have a mandatory no-pay clause turned off in April. It is believed that once the dividends get turned back on, the returns could be significant.

The dividends were turned off after the Edinburgh-based bank received a government bailout.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.