Regency Centers prices $250 million of 6.625% preferreds; Realty Income greenshoe exercised

By Stephanie N. Rotondo

Portland, Ore., Feb. 7 - Trading in preferred stocks was "definitely more active" on Tuesday than Monday, a market source reported.

The source also said it was a "pretty green" day overall.

Regency Centers Corp. priced its new issue of series 6 cumulative redeemable preferreds during the session. The deal came in line with price talk and was "put away very easily," a trader said.

Among other recent new deals, Realty Income Corp. said it closed its sale of 6.625% monthly income class F preferreds and the underwriters exercised their over-allotment option in full. Market sources saw the issue trading around par.

Away from recent issues, the secondary market continued to be a bit Royal Bank of Scotland Group plc-centric. Trading was active, and the bank's preferreds ended the day mixed.

Regency prices new issue

Regency Centers brought a $250 million offering of 6.625% series 6 cumulative redeemable perpetual preferred stock, the company said in a regulatory filing on Tuesday.

The deal came in line with price talk.

"It did very well," a trader said. "It was syndicated very well and put away very easily."

He pegged the issue at $24.90, noting that he expected it to increase on Wednesday when the issue was expected to free from the syndicate group.

Another market source quoted the preferreds at $24.92 bid, $24.97 offered.

The Jacksonville, Fla.-based real estate investment trust is selling the preferreds at $25.00 each.

On or after Feb. 16, 2017, the company has the option to redeem the preferreds at par plus accrued dividends. There is also a change-of-control conversion clause.

The company intends to list the preferreds on the New York Stock Exchange under the symbol "REGPF." Settlement is expected Feb. 16.

Proceeds will be moved to the company's operating partnership, Regency Centers LP, which will use the funds for general corporate purposes, including redeeming other preferred securities.

Regency said Tuesday that it will redeem all of its 7.45% series 3 cumulative redeemable preferreds and all of its 7.25% series 4 cumulative redeemable preferreds. Additionally, Regency purchased all of the outstanding 7.45% series D cumulative redeemable preferred limited partnership units from its operating partnership.

Realty greenshoe exercised

Realty Income's offering of 6.625% monthly income class F cumulative redeemable preferred stock closed Tuesday, the company said in a press release. The underwriters exercised their over-allotment option in full, raising the size of the deal to $373.75 million from $325 million.

The deal priced Jan. 31. Net proceeds will be about $361.7 million.

Traders were lauding the deal, with one seeing the issue "wrapped around par." Another source quoted the securities at $24.97 bid, $25.02 offered.

The Escondido, Calif.-based REIT intends to list the preferreds on the NYSE.

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

RBS mixed but active

Royal Bank of Scotland preferreds were again trading actively, as has been the recent trend. The preferred complex finished the session mixed overall.

The 6.6% series S noncumulative dollar preference shares (NYSE: RBSPS) fell 2 cents to $16.07, while the 7.25% series T noncumulative dollar preference shares (NYSE: RBSPT) earned 12 cents, closing at $17.82. The 6.75% series Q noncumulative preference shares (NYSE RBSPQ) moved up 6 cents to $16.51.

Of the issues trading in relatively decent size, the 7.25% series H noncumulative dollar preference shares (NYSE: RBSPH) were the biggest percentage mover, gaining 46 cents, or 2.27%, to end at $20.67.

In April, the mandatory no-pay period imposed by the U.K. government will expire for some of the Edinburgh-based bank's preferreds. Recent activity in the name suggests that there is a potential for returns in the near future.

"RBS is moving aggressively in the right direction," a source said. "When the mandatory non-pay period ends in April, it makes it more likely that they'll go back and start paying again."

If you believe that to be the case, he said, the preferreds are currently "pretty cheap."

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