Federal Realty talks $400 million five-year exchangeable notes at 3.25%-3.75%, up 20%-25%

By Abigail W. Adams

Portland, Me., Jan. 8 – Federal Realty OP LP plans to price $400 million of five-year notes exchangeable for Federal Realty Investment Trust’s stock after the market close on Monday with price talk for a coupon of 3.25% to 3.75% and an initial exchange premium of 20% to 25%, according to a market source.

J.P. Morgan Securities LLC, BofA Securities Inc. and Wells Fargo Securities LLC are bookrunners for the Rule 144A offering, which carries a greenshoe of $60 million.

ICR Capital LLC is financial adviser to the company.

The notes are non-callable for three years then subject to a 130% hurdle.

There is takeover and dividend protection above $1.09 a quarter.

The notes will be settled in cash up to the principal amount with any remaining amounts to be settled in cash, shares or a combination of both at the company’s option.

In connection with the offering, the company will enter into capped call transactions.

Proceeds will be used to cover the cost of the call spread, to repay debt and for general corporate purposes.

Federal Realty is a North Bethesda, Md.-based real estate investment trust focused on shopping centers.

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