VEREIT has priced a new issue of Senior Notes–NOT baby bonds.
$600 million in investment grade notes were priced at 3.10%. The notes are expected to be rated Baa3 by Moodys, BBB- by S&P and BBB by Fitch.
I only mention this because the VEREIT 6.70% perpetual preferreds have been a favorite of many of us–and for good reason–where do you find this coupon of a quality REIT?
While I won’t go into detail VEREIT is the old American Realty Capital Properties, which almost fizzled out of existence 5 years ago because of accounting fraud.
VEREIT announced a settlement of about $740 million in September and now the company can move forward. This is no little company–they have $14 billion in assets and $7 Billion in equity, but the lack of a settlement in the American Realty Capital accounting fraud case had hindered the company from moving ahead with the normal course of business.
The VER-F preferred fell by 36 cents today as the filing on the above referenced senior notes stated they would be calling some number of the issue. With VER-F now trading at $25.12 it would seem that a partial call of the issue might leave some opportunity.
With a monthly dividend of almost 14 cents any shares left outstanding will garner a generous coupon.
There are currently 39 million shares of the VER-F issue outstanding (as they had previously redeemed 4 million) so it would require $1 billion for a full redemption, but in the prospectus for the notes they used an ‘assume’ $200 million for redemption–so this should leave around 30 million shares out.
The prospectus on the notes can be read here. The pricing document is here.