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
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Exchange entity: | Federal Realty Investment Trust stock
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Amount: | $425 million
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Greenshoe: | $60 million
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Issue: | Exchangeable notes
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Maturity: | Jan. 15, 2029
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Bookrunners: | J.P. Morgan Securities LLC, BofA Securities Inc. and Wells Fargo Securities LLC
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Financial adviser: | ICR Capital LLC
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Coupon: | 3.25%
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Price: | Par
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Yield: | 3.25%
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Exchange premium: | 20%
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Exchange price: | $122.80
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Exchange rate: | 8.1436
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Call options: | Non-callable until Jan. 20, 2027 and then subject to a 130% hurdle
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Put options: | Upon a fundamental change
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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%
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Stock symbol: | NYSE: FRT
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Stock price: | $102.33 at market close Jan. 8
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Market capitalization: | $8.35 billion
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