American Homes 4 Rent upsizes to $200 million; Hercules brings $60 million more $25-par notes

By Stephanie N. Rotondo

Seattle, June 22 – The preferred stock new issue pipeline continued to flow on Wednesday as American Homes 4 Rent priced a deal and Hercules Capital Inc. reopened its $25-par notes.

A trader said that he heard there would be another new deal, “but they might wait until the Brexit vote.”

The United Kingdom is set to vote on Thursday on whether or not to leave the European Union.

Additionally, the trader noted that Public Storage had said late Tuesday that it was redeeming all of its outstanding 6.35% series R cumulative redeemable preferreds on July 26.

“I don’t know if that is the new deal or not,” he said.

American Homes prices

American Homes 4 Rent brought $200 million of 6.35% series E cumulative redeemable preferreds.

The deal came upsized from $100 million and tighter than the 6.375% to 6.5% price talk.

Wells Fargo Securities LLC, BofA Merrill Lynch, Morgan Stanley & Co. LLC and Raymond James & Associates Inc. ran the books.

A trader pegged the issue at $24.92 bid, $24.97 offered in early trading.

The Agoura Hills, Calif.-based real estate investment trust will contribute proceeds to its operating partnership, which will then use the funds to pay down a credit facility, to acquire single-family properties and for general corporate purposes, including repurchases of the company’s securities.

Hercules reopens

Hercules Capital priced an additional $60 million of its 6.25% $25-par notes due 2024 (NYSE: HTGX) in a reopening, a market source reported on Wednesday.

The notes were trading off 49 cents, or 1.91%, at $25.60 at mid-morning. They closed at $25.22, down 43 cents, or 1.68%.

The Palo Alto, Calif.-based specialty finance company initially sold $103 million of the notes on July 14, 2014 and another $72.95 million on May 2.

In the reopening, Keefe, Bruyette & Woods Inc., Morgan Stanley and Wells Fargo were the joint bookrunners. Janney Montgomery Scott LLC was the lead manager.

Proceeds will be used to fund investments in debt and equity securities and for other general corporate purposes.

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