By Kenneth Lim
Boston, Oct. 19 - Home Properties Inc. on Wednesday priced $175 million of 20-year exchangeable senior notes at the cheap end of talk, at a coupon of 4.125% and an initial exchange premium of 18%.
The exchangeables, which were offered at par, were talked at a coupon of 3.875% to 4.125% and an initial exchange premium of 18% to 22%.
The notes will be issued by operating partnership Home Properties LP and exchangeable into common stock of the listed company.
There is an over-allotment option for a further $25 million.
Merrill Lynch is the bookrunner of the Rule 144A offering.
The notes will be non-callable for the first five years and may be put in years five, 10 and 15.
There will be a contingent exchange hurdle at 130% of the conversion price.
The notes will have full dividend protection via an exchange ratio adjustment, and change-of-control protection in the form of a make-whole premium.
Home Properties, a Rochester, N.Y.-based real estate investment trust that focuses on residential apartment communities in the United States, said it will use about $58 million of the proceeds to concurrently buy back stock and another $70 million to repay an outstanding revolving loan. The rest of the proceeds will be used for general corporate purposes.
| Issuer: | Home Properties LP
|
| Issue: | Exchangeable senior notes
|
| Exchange property: | Home Properties Inc. common stock
|
| Bookrunner: | Merrill Lynch
|
| Amount: | $175 million
|
| Greenshoe: | $25 million
|
| Maturity: | Nov. 1, 2026
|
| Coupon: | 4.125%
|
| Price: | Par
|
| Yield: | 4.125%
|
| Exchange premium: | 18%
|
| Exchange price: | $73.34
|
| Exchange ratio: | 13.6357
|
| Contingent conversion: | 130%
|
| Dividend protection: | Yes
|
| Takeover protection: | Make-whole premium
|
| Call protection: | Non-callable before Nov. 6, 2011
|
| Puts: | Nov. 1, 2011; Nov. 1, 2016; Nov. 1, 2021
|
| Price talk: | 3.875%-4.125%, up 18%-22%
|
| Pricing date: | Oct. 18, after the close
|
| Distribution: | Rule 144A
|
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