Armour Residential REIT Prices New Preferred-Updated

Update–The OTC Grey Market symbol has been announced as ARMRP.

mREIT Armour Residential REIT (ARR) has priced their new issue of perpetual preferred stock.

The issue priced at 7.00%–once again lower than the earlier ‘yield talk’.

The issue will be cumulative, non qualified and optionally redeemable starting in January, 2025. This issue will pay a monthly dividend.

The company will be calling a portion of the ARR-B with the proceeds. Initially the company estimated calling 30% of the 6.210 million shares of the B issue, but it looks like they will be able to call as much as approximately 50% if desired as they are selling 3.45 million of the new issue.

The pricing term sheet can be read here.

49 thoughts on “Armour Residential REIT Prices New Preferred-Updated”

  1. Am I missing something? I don’t see why would one want to buy the preferred stock on this company? The financials for the parent company ARR look pretty dismal.
    EPS = -10.91
    Debt/Equity = 853%
    Cash Flow = -$85M
    ROA = -5.2%
    ROE = -44%

    1. Tom, you are not missing something as far as the idea of owning stocks where the company is sound, growth, debt levels, owning long term, etc. But, that investment philosophy is not shared by others. One look at the books and I don’t like them either.

      If you look at what happened in 2019… you see a lot of frothiness in the bond market. This is causing yield starvation. The so called greed factor is getting higher and higher each month. That is why I am fully invested, mainly in past call issues, and am comfortable with my investments waiting for a correction. Too much of anything usually does not pan out long term. Corp and gov’t debt increasing, credit defaults across the board are going up, continual injection of money, etc. When you go to the grocery store and avg Jills and Joes are talking about how much money they are making in the stock market and their returns over 20+%… you know this cant continue year over year.

    2. You’re missing a 7% return. The safer REIT preferreds are priced in the stratosphere with low YTC.
      ARR common stock would be more concerned about those numbers. Preferred stock has bankruptcy risk but no dividend cut before then. As a trader not planning to hold forever what i care most about is how it will perform in the near future.

    3. Tom, I looked into ARR and am not sure but, a cup seemed to have formed.
      The handle may or may not occur.
      You can Google “Cup and Handle” on investopedia.

    4. With mREITs, I would focus on Net Investment Income rather than GAAP EPS. Also, while leverage is high, they own agency MBS which is almost as safe as treasuries since they are implicitly (and sometimes explicitly) backed by the government.

      1. For the record best I can figure, Martin, buying ARR-B today at 25.10 will almost double money market rates as its YTC = approx 2.90% depending what you use as settlement date..I’d say it’s a little less since you’re committing today (and therefore your money’s used today) and don’t start getting accrued until 1/28, but on a settlement day basis, it’s 2.897%. So the “not by much” has more to do with the short amount of time you can get it more than the amount it beats money markets.

  2. Was able to buy on Etrade, but had to call to get it. $24.98. Apparently not listed yet for online or mobile trading.

  3. Just grabbed 200 ARMRP 24.91 at Schwab. They have a problem with how the symbol may or may not drop down with the complete stock info- just below the input box. It did not show at first, but- I clicked below the input box, and it then showed the info. Has happened before- espec with preferreds.
    Holding my ARR-b until near close out date- will get Jan & Feb divs.
    I could not find the symbol until I looked here (thanks!) – how do you get it ahead of time?
    And ARMxx – what the heck- didn’t try that one. Surprise someone got it at 24.50 Now >906K shares

    1. Couldn’t find it on Schwab’s Street Smart so I logged into their old site and there it was.
      Ameritrade didn’t show it from the search bar so I went to trade something and manually logged in the symbol.
      Fidelity doesn’t show it anywhere but if you want it try calling a Rep. If they can’t find it tell them to type in the Cusip # in place of the symbol.

    2. Finally Fidelity can accept orders but the price is very close to par. 🙁
      TDA charges commission for its order b/c it is trade OTC

      1. ARMRP is the temporary symbol. Soon it will change to a permanent symbol ARR-B, though on schwab it will probably be ARR/PRB. Different brokers have different ways of writing the symbols.

  4. well, I like some other posters from the last couple days started to pickup some arr-b. too bad its being 100% redeemed. but yeah, its 7cents below redeemable price plus feb divi. I guess its still good for a handful of dollar bills…

  5. It was available briefly on E*TRADE. Checked 1/2hr ago, no quote. Happened to try again about 10min ago and had an order executed at the ask of $24.91. Refreshed the quote 5 minutes later and says unavailable.

    Not showing at Vanguard for me

    1. You can call Vanguard. They will find it and place the order for you. Just picked up some @ 24.97.

  6. ARMRP is now trading on TDA and the TOS platform. Just grabbed some at $25.85 and entered an order for more at a lower price.

  7. TDameritrade shows the symbol and has 107,000 volume.
    When i put a buy order in, it said security not found.
    High 24.85 Low 24.80

      1. mcg,

        For ARR-C and for other IPO securities, where have you been getting temp symbols?
        I very much appreciate your posts of them. Yours and others’ postings of temp symbols on this site have been invaluable.

        Thanks again.
        mbg

    1. Gman, the Grey Sheet symbol is ARMRP. This 7% preferred offering was upsized and the deal is in very good shape according to my contact at one of the underwriters Janney Montgomery Scott.
      Wishing you profitable investing, Nomad

  8. They are redeeming 100% of the Series A. The series C proceeds will provide part of the funds needed to redeem 100% of the A Series. “The Company plans to use the net proceeds of this offering as a portion of the funds used to redeem 100% of the shares of its outstanding 7.875% Series B Cumulative Redeemable Preferred Stock (NYSE: ARR-PB, CUSIP 042315408), which is an increase from the previously announced partial redemption.”

  9. Press Release
    ARMOUR Residential REIT, Inc. Prices $75 Million Public Offering of 7.00% Series C Cumulative Redeemable Preferred Stock
    Also Announces Full Redemption of Outstanding 7.875% Series B Cumulative Redeemable Preferred Stock
    Company Release – 1/23/2020 5:16 PM ET

    VERO BEACH, Fla., Jan. 23, 2020 (GLOBE NEWSWIRE) — ARMOUR Residential REIT, Inc. (NYSE: ARR and ARR‑PB) (“ARMOUR” or the “Company”) today announced the pricing of its underwritten registered public offering of 3 million shares of its new 7.00% Series C Cumulative Redeemable Preferred Stock (the “Series C Preferred Stock”) at a public offering price of $25.00 per share, raising gross proceeds of $75 million before deducting underwriting discounts and other estimated offering expenses. In connection with the offering, the Company has granted the underwriters a 30-day option to purchase up to an additional 450,000 shares on the same terms and conditions solely to cover overallotments, if any. The offering is expected to close on or about January 28, 2020, subject to customary closing conditions. The shares of Series C Preferred Stock are expected to begin trading on the New York Stock Exchange under the symbol “ARR PC” within 30 days of the closing date of this offering, if approved.

    The Company plans to use the net proceeds of this offering as a portion of the funds used to redeem 100% of the shares of its outstanding 7.875% Series B Cumulative Redeemable Preferred Stock (NYSE: ARR-PB, CUSIP 042315408), which is an increase from the previously announced partial redemption.

    1. I’ve bought the ARR-B at 25.10. Seems like a good buy with a 16.41 cents dividend coming, plus perhaps a few days of accrued interest.

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