Armada Hoffler Prices Preferred Issue

REIT Armada Hoffler (NYSE:AHH) has priced their new issue with a fixed rate coupon of 6.75%.

The company will be selling 2.2 million shares with an additional 330,000 shares available for over allotments.

Of course the shares are perpetual (no maturity), but an optional redemption period (at the company’s option) starts 6/18/2024.

Dividends are cumulative, but not qualified.

The permanent ticker is AHH-A, but shares will trade on the OTC Grey market under ticker AMAHP starting immediately.

The pricing term sheet can be read here.

19 thoughts on “Armada Hoffler Prices Preferred Issue”

  1. Is anyone other than timdman and myself buying any of this one ? I picked up $400 at 25.30.

    1. I just got Merrill to spin this up in the system and place some orders. Prior to calling, there was nothing coming up on a symbol or CUSIP search. The rep gave some crap about it not officially trading yet and not being listed on QOL yet. I almost hung up. I guess QOL’s list of IPO’s is what they are referencing now? Oy!!

      1. That’s a good one Affinity4Investing. What clowns these folks can be some times.

        1. It gets better, Tim. Today, I called about the new DOMGL offering. No luck with buying it from them. They have it restricted as a ‘penny stock’. WTH? 1.5bb offering, IG, etc. However, they let me buy the new Armada Hoffler offering yesterday, which has 1/3rd the market cap on the offering and is not IG. I’m still shaking my head. Looks like TD might be seeing a new account opening from me.

    2. Retired, My $25.15 bid never executed, upped to $25.30 and it executed. Small position. Etrade had it trading since the open.

    3. Retired, I bought shares at TD this morning at $25.30.

      Called Vanguard today to place a trade in another account and after several calls, they said it could not be traded until tomorrow in their system. I’m on the phone with Schwab now to see if they can get the symbol set up in their system, but the bid price is now up to $25.40 and the ask is at $25.70. They stated it should be available for trading in Schwab once they get the symbol set up in their system, probably about 1:00 EST.

      1. If anyone is still trying to purchase shares today, Vanguard called me back and was able to push an order through for me today. The symbol is now up and running at Schwab, although the ask price is now $25.45.

  2. AHH is paying about $380 psf on the property, but I suspect they will pick up a first mortgage on the property and the preferreds will be the “mezzanine” financing on the building, as they don’t have enough cash to buy it outright. They can probably get financing fixed for 10 years at below 5%, so it may be a good deal for them. I may pick up a few shares in the next week if the price is right.

    This sector in Baltimore, MD is hot right now and here is a link to a website on the property.

    1. AHH also owns student housing on one of the Johns Hopkins campuses here in BMORE. Very nice place and guaranteed to be sold out for damn near forever as popular as Hopkins is. I’m in for 200 shares today.

  3. That yield seems awfully high for an established company like AHH.

    I would guess the price will scream higher in this environment before anyone can get their hands on it, unless they can get an allotment from their broker before trading opens.

    1. Here is the scoop for why they are issuing the preferred…
      Armada Hoffler Properties (NYSE:AHH) agrees to acquire Thames Street Wharf office building in the Harbor Point development of Baltimore, MD, for $101M.
      Morgan Stanley and Johns Hopkins Medicine together lease 92% of the property’s 263,426 rentable square feet; building is 100% occupied with an average remaining lease term of 7.4 years.
      Sees purchase adding to funds from operations with the property generating an expected cash net operating income of ~$7.1M in the first full year of ownership, equating to an estimated underwritten cash capitalization rate of 7.1%.
      Plans a public offering of series A cumulative redeemable perpetual preferred stock to raise cash to pay for the acquisition.

      1. Grid, 2.2MM would only get them $55MM minus fees or even with the over allotment of an addition 300K shares they will raise $57.5 minus fees. The deal for the Maryland property is $101MM; where are they getting the additional needed cash? The Voya priced at 5.35% 😱; any yield talk on this IPO?
        Wishing you profitable investing, Nomad

        1. They better be asking you, Nomad and not me as you could better plug the $50 million dollar hole than I could! Probably the usual suspects, revolver, debt issuance or common equity down the road. I havent stumbled unto that missing part.
          Looks like they are building and owning quite the complex area there in Baltimore wharf area. Got a big construction going on right there due to be finished in 2020.

    2. donocash–give it a try tomorrow–I might, but only for a “flip” of 1-2%.

      1. Tim, I may possibly play the game too if it doesnt race away from me.
        Oh, Nomad, I forgot about your other comment…No Voila’ on Voya from me! At that yield I would rather lose money on Canadian resets than buy that, lol.

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