By Abigail W. Adams
Portland, Me., Jan. 9 – Federal Realty OP LP priced an upsized $425 million of five-year notes exchangeable for Federal Realty Investment Trust’s stock after the market close on Monday at par with a coupon of 3.25% and an initial exchange premium of 20%, according to a company news release.
Pricing came at the rich end of price talk for a coupon of 3.25% to 3.75% and at the cheap end of talk for 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 were bookrunners for the Rule 144A offering, which carries a greenshoe of $60 million.
ICR Capital LLC is financial adviser to the company.
The initial size of the offering was $400 million. The greenshoe was not upsized.
The notes are non-callable until Jan. 20, 2027 and then subject to a 130% hurdle.
They are putable upon a fundamental change.
There is 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 entered into capped call transactions with a cap price of $143.26, which represents a 40% premium over the last reported sales price of stock.
Net proceeds are expected to be $413 million or will be $471 million if the greenshoe is exercised in full.
Approximately $17 million of net proceeds will be used to cover the cost of the call spread with remaining amounts used to repay debt and for general corporate purposes.
Federal Realty is a North Bethesda, Md.-based real estate investment trust focused on shopping centers.
| Issuer: | Federal Realty OP LP
|
| Exchange entity: | Federal Realty Investment Trust stock
|
| Amount: | $425 million
|
| Greenshoe: | $60 million
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| Issue: | Exchangeable notes
|
| Maturity: | Jan. 15, 2029
|
| Bookrunners: | J.P. Morgan Securities LLC, BofA Securities Inc. and Wells Fargo Securities LLC
|
| Financial adviser: | ICR Capital LLC
|
| Coupon: | 3.25%
|
| Price: | Par
|
| Yield: | 3.25%
|
| Exchange premium: | 20%
|
| Exchange price: | $122.80
|
| Exchange rate: | 8.1436
|
| Call options: | Non-callable until Jan. 20, 2027 and then subject to a 130% hurdle
|
| Put options: | Upon a fundamental change
|
| Pricing date: | Jan. 8
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| Settlement date: | Jan. 11
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| Distribution: | Rule 144A
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| Talk: | Coupon of 3.25% to 3.75% and initial exchange premium of 20% to 25%
|
| Stock symbol: | NYSE: FRT
|
| Stock price: | $102.33 at market close Jan. 8
|
| Market capitalization: | $8.35 billion
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