REIT VEREIT Prices Senior Notes

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.

8 thoughts on “REIT VEREIT Prices Senior Notes”

  1. Thanks this is great information. I purchased yesterday as soon as I saw it was only a partial redemption. It was for my tactical holdings.

    After reviewing more about the company and the settlement, this will become a long term holding.

    Plus, I have a real affinity for monthly dividend payers.

    1. I feel like you SteveA. I doubled up yesterday and may do it again today-knowing that some of it will be redeemed. I love monthly payers–nice steady income flow.

      1. How do they determine which shares to redeem? Just a percentage of everyone’s or do some “lose” more than others? Or, is there a voluntary option?

        1. Mark–it should be everyone–prorata. They will segregate them in your account and then on the ‘date’ will go away. We had one of these recently with Eagle Point 50% called–so I had 2 listings in my accounts for a few weeks. We shall see on this one–I’m not aware of an official notice of redemption yet.

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