Colony NorthStar prices $300 million preferreds; Public Storage, B. Riley, Capitala lower

By Colin Hanner

Chicago, May 24 – A deal announced mid-morning on Wednesday came to market later in the afternoon in the preferred market, a market source said, though liquidity remained muted on the session.

The Wells Fargo Hybrid and Preferred Securities index was up 1 basis point, while the U.S. iShares Preferred Stock ETF was up 3 bps.

Los Angeles-based real estate and investment management firm Colony NorthStar, Inc. priced an upsized $300 million of 7.15% $25-par series I cumulative redeemable perpetual preferred units, a market source said.

Price talk for the notes was in the 7.25% area before tightening to 7.15%.

The size of the deal was upsized from $100 million.

In the gray market, the issue was doing “quite well,” a market source said, quoting it with a $24.90 bid.

BofA Merrill Lynch, J.P. Morgan Securities LLC, Morgan Stanley & Co. LLC, RBC Capital Markets, LLC and UBS Securities LLC are joint bookrunners for the offering.

Citigroup Global Markets Inc. and Keefe, Bruyette & Woods, Inc. are the co-managers.

Dividends will be payable quarterly. The preferreds become redeemable in June 2022 at par plus accrued dividends. The issue can also be called upon a change of control.

The new securities will be listed on the New York Stock Exchange under the ticker symbol “CLNSPrI.”

Proceeds of the offering will go toward redeeming some or all of the shares of its 8.75% series A cumulative redeemable perpetual preferred stock and its outstanding 8.5% series F cumulative redeemable perpetual preferred stock, as well as for other general corporate purposes.

The company’s existing series A preferreds (NYSE: CLNSPrA) were down 7 cents, or 0.27%, to $25.27, while the series F preferreds (NYSE: CLNSPrF) were down 12 cents, or 0.47%, to $25.38.

Recent deals trading

Elsewhere in the new deal space, Public Storage’s $250 million issue of 5.15% series F cumulative preferreds were trading “not that much lower than what they had been during the session” at 24.80, a market source said.

That deal is expected to list on the NYSE under the ticker symbol “PSAPrF.”

B. Riley Financial Inc.’s $52.5 million of 7.5% $25-par senior notes due 2027 (Nasdaq: RILYL) were down 2 cents, or 0.07%, to $25.75. The issue listed on Wednesday.

And, a day following its listing on the Nasdaq Global Select Market, Capitala Finance Corp.’s $70 million of 6% $25-par notes due 2022 (Nasdaq: CPTAL) were down 15 cents, or 0.59%, to $25.10.

The deal priced May 10.

GSE’s get back

There was no news moving government-sponsored enterprises Fannie Mae and Freddie Mac one way or the other on Wednesday, a market source said, but they did recoup some of their losses from Tuesday.

Fannie’s 8.25% series S fixed-to-floating rate noncumulative preferreds (OTCBB: FNMAS) were up 10 cents, or 1.72%, to $5.90.

Freddie’s 8.375% fixed-to-floating rate noncumulative preferreds (OTCBB: FMCKJ) were up 9 cents, or 1.61%, to $5.69.

Tuesday’s losses were attributed to a report issued by FTN strategist Jim Vogel, in which he said that Mel Watt, head of the Federal Housing Finance Agency, still has not explained “what it might accomplish to accumulate capital each quarter” when any corporate tax cut would probably create a “one-time GAAP earnings hit as soon as the new rate was passed.”

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