Federal Realty greenshoe ups five-year exchangeables to $485 million

By Wendy Van Sickle

Columbus, Ohio, Jan. 11 – Underwriters for Federal Realty OP LP’s 3.25% notes due Jan. 15, 2029 and exchangeable for Federal Realty Investment Trust’s stock fully exercised their $60 million greenshoe, lifting the total size of the deal to $485 million, according to a news release.

As previously reported, the company priced $425 million of the exchangeable notes after the market close on Jan. 8 at par with an initial exchange premium of 20%.

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,

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 will be $471 million with the greenshoe.

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.

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