Triple Net Lease REIT VEREIT to Redeem More Preferred Shares

Many of us have held the preferred shares in triple net lease REIT VEREIT (VER) for quite some time. I have a few shares now, but just a taste.

The company has a 6.70% perpetual preferred (VER-F) outstanding which was a giant issue–originally around 43 million shares. Since the issue became redeemable in 2019 the company has called for redemption at least twice for 12 million shares–last I calculated there were still around 30 million shares outstanding.

Shares are now trading around $25.09. The shares pay a monthly 13.9 cent dividend. I expect shares will trade around the same level for the next year or so based upon the expectation that shares will all be called when the company is able to garner enough money to make it happen.

The company is selling more debt to redeem another chunk of the Series F preferred

For those that don’t own any of the VER-F issue it is a reasonable spot to garner 6.70% from a large REIT.

Potential investors should do their due diligence to understand the history behind VEREIT. Any one buying at this moment will have a portion of their shares called away in the next month (i.e. if you buy 100 shares today you may have around 20 shares called–just guessing).

11 thoughts on “Triple Net Lease REIT VEREIT to Redeem More Preferred Shares”

  1. Officially, will redeem 6 million shares or 19.44% of outstanding. July 22 is the date.

    Segregation should take place soon.

  2. Looks like a $100 million redemption:

    05:34 PM EDT, 06/18/2020 (MT Newswires) — Vereit(VER) , a real estate investment trust focused on single-tenant commercial properties in the US, said after markets closed on Thursday that its operating partnership, Vereit Operating Partnership, has priced an offering of $600 million of 3.4% senior notes that mature in 2028 at an issue price of 99.144% of par value.

    The issuer will use the funds raised from the offering, which is set to close on June 29, to redeem $100 million of Vereit’s(VER) 6.7% series F cumulative redeemable preferred stock, and to repay borrowings under its revolving credit facility.

    Price: 7.01, Change: +0.03, Percent Change: +0.37

    1. Does look like they are sticking to 100 million. For now. I have long been at my max limit on VER-F so I may have to buy a few shares after the called shares have been segregated.

  3. VER pulled in 600 million at 3.4% on the note issue. I will be looking for a good sized call on the preferred.

  4. The pertinent section mentions several potential uses of the proceeds:

    USE OF PROCEEDS

    We estimate that the net proceeds from this offering, after deducting the underwriting discount and our estimated expenses related to this offering, will be approximately $ million. We intend to use the net proceeds from this offering to make a distribution to VEREIT, which VEREIT intends to use to fund the Series F Partial Redemption and to repay borrowings under our Revolving Credit Facility contemporaneously with or shortly after, the closing of this offering. In addition, we may use a portion of the net proceeds from this offering, together with borrowings under our Revolving Credit Facility or cash on hand, to make a distribution to VEREIT to fund the purchase of a portion of or the repayment at maturity of the Convertible Notes. These intentions are subject to change. None of the Series F Partial Redemption, the repayment of borrowings under our Revolving Credit Facility or purchase of Convertible Notes before maturity, or the delivery of notices, offers or other documentation in connection therewith, is a condition to closing this offering of notes.

    Our Revolving Credit Facility, which is scheduled to terminate on May 23, 2022, unless extended in accordance with the terms of our Credit Agreement, generally bears interest at an annual rate of LIBOR plus 0.775% to 1.55% or a defined base rate plus 0.00% to 0.55% (based upon our then current credit rating). As of March 31, 2020, the actual interest rate on our Revolving Credit Facility was 1.92%.

    The Convertible Notes, which are scheduled to mature on December 15, 2020, bear interest at an annual rate of 3.75%.

    Neither this prospectus supplement nor the accompanying prospectus constitutes a notice of redemption or offer to purchase any of our securities. :

    1. Retired–correct–their assumed redemption of F shares is 4 million (per their example).

  5. As of June 16, VEREIT had received approx. 84% of April rent, 84% of May rent, and 82% of June rent, which includes approx. 2% to be paid in arrears by a Government agency tenant. VEREIT is in ongoing discussions with tenants regarding unpaid rent.The company is seeing some positive movement in certain property categories as parts of the country reopen.As of June 16, VEREIT had corporate liquidity of approx. $1.2 bln, comprised of $101.0 mln in cash and cash equivalents and $1.1 bln of availability under its credit facility.

Leave a Reply

Your email address will not be published. Required fields are marked *