Midday Commentary: Kimco Realty upsizes planned offering; Chesapeake, Vornado seen trading

By Andrea Heisinger

New York, July 16 - The real estate investment trust sector was again active in the preferred stock market on Monday morning as a new offering was announced by Kimco Realty Corp.

Kimco gave plans for a $225 million offering, a market source said in late morning. The size was increased from the minimum $150 million given in a 424B5 filing with the Securities and Exchange Commission.

"I would imagine it will price today since it's doing so well," a trader said.

He also called it "not a bad deal" as price talk hovered at 5.5%. The notes were quoted in trading at $24.97.

Otherwise, there's "not much else" happening in the primary other than a couple of other real estate investment trusts doing shelf filings with the SEC for securities, including preferred stock.

Recent deals of preferreds from Chesapeake Lodging Trust and Chesapeake Lodging LP and Vornado Realty Trust were each seen trading above $25.00.

Whitestone REIT filed a $350 million mixed securities shelf while AG Mortgage Investment Trust Inc. filed for a $1 billion mixed shelf, the trader said.

Kimco announces offering

Kimco Realty plans to sell an upsized $225 million of class J cumulative redeemable preferreds, a source said.

The size of the sale was increased from the minimum of $150 million.

A trader said price talk was 5.625% to 5.75%. It was then revised to 5.5% to 5.625%.

The preferreds will be issued as depositary shares representing a 1/1,000th interest in the class J stock.

Dividends will be payable quarterly on the 15th day of January, April, July and October, beginning Oct. 15.

The preferred stock will become redeemable in July 2017. There is no stated maturity.

Ownership will be restricted to 9.8% of the outstanding preferreds.

Kimco will apply to list the new series of preferreds on the New York Stock Exchange.

Bank of America Merrill Lynch, Morgan Stanley & Co. Inc., UBS Securities LLC and Wells Fargo Securities LLC are the bookrunners.

Proceeds will be used to redeem the company's class F preferreds on or about Aug. 15 and for general corporate purposes.

Kimco is a New Hyde Park, N.Y.-based real estate investment trust.

Chesapeake, Vornado active

A trader said that the 7.75% series A cumulative redeemable preferreds from Chesapeake were actively trading between $25.20 and $25.25.

The $125 million deal from the lodging real estate investment trust was originally priced at par of $25.00 on July 10 at $110 million in size with a greenshoe later exercised.

Vornado, a New York City-based real estate investment trust, priced its $300 million of 5.7% series K cumulative redeemable perpetual preferreds on July 11 at par of $25.00. The notes were quoted at $25.10 to $25.15 in late-morning trading, the trader said.

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