VEREIT to Call 6.70% Preferred–Update

UPDATE–This will be just a partial redemption of the issue–amount yet to be determined.

REIT VEREIT (VER) has announced a new senior note offering with the intent to call the 6.70% perpetual VER-F, monthly paying preferred.

This has been a favorite of mine–another one gone. It looks like a small loss of capital this morning as the shares are trading at $25.48–the monthly dividend is about 14 cents. This is a case where I have held a small position knowing the call risk was there–but which I chose to incur for the 6.70% coupon–I have held it for a fairly long time.

The preliminary prospectus on the notes can be seen here.

22 thoughts on “VEREIT to Call 6.70% Preferred–Update”

    1. Thank you Dave. I bought 450 on the sell off the other day at 25.17. Somebody here stated about 20% would be plucked so I bought the 50 extra to cover that part.

  1. I assume that the stub dividend, i.e last payment included with a partial redemption, would be pro-rated based from the DATE OF LAST PAYMENT, i.e. December 16, and NOT from the last ex-dividend date, i.e. November 27. Do I understand correctly? If so, then Tim’s fair value estimate of 25.10 is about right.

    1. Dave–they are to give 30-60 days notice for redemption (per the prospectus)so we will have to see what they come up with. They just priced their notes at 3.1% with a 2029 maturity. Should be prorated from the dividend payment date so right today I think around 25.15 if they give 30 days notice.

      1. Thank you Tim. Being conservative I factored in approximately 3 cents a share for short term interest rate , i.e. opportunity cost, for 30+ days from purchase to worst case call in December for the theoretical pro-rated redemption share amount which coincidentally is net very close to todays market close. So we are basically the same.
        Thanks so much for your work on this website and for the excellent commentary from so many of your sagacious regular contributors that are so much more knowledgeable than I. Tim the best!

    1. 730Cap–that would be welcome–they had done a partial back in July.

      1. If it is a partial call, then buying today at $25.10 looks attractive. I have
        just bot a partial position @$25.11. Thanks for all the valuable info posted here!

        1. dan–was kind of pondering the same thing. Of course likely a portion gets called away so one doesn’t want to pay more than the 25.10 or so area–but in a partial call each month is a bonus for the holder.

          1. Exactly Tim. I would guess there is $772 million left on table (almost 31 million shares). They have only redeemed 28% ish of the total shares. My spare cash went here. If I did my quick math right…

            1. Mr. Lucky–I went in for another 300 and may do some more yet today.

              1. Very nice Tim. I decided to own 7% of the shares traded today. I have owned this one for a few years. It has been a ship that has been on a journey with Glenn trying to right their wrongs with past mgmt. They are beginning to put the past behind them with the settlement. They are also redeeming shares regularly, which fits in with my theme of owning pinned to par preferreds, and always be invested in the market. It is also another reason for me to not be tempted to own the perpetual 4%’s coming to market 🙂

    2. 730, Where are you getting this? Use of Proceeds and Capitalization notes appear to indicate extinguishment.

      1. 730, I see the assumption now. If it stands, based on current outstanding appears to be a tad over a 20% redemption.

  2. It will be interesting to see the rate and maturity of the new notes. Their current notes are rated Baa3/BBB-, the lowest rung of investment grade. Notes currently maturing in 2027 are trading with a YTM of about 3.10%, so I’m expecting the coupon rate to be fairly low.

    1. Mseni,

      They stated approximately 30 days after the pricing of the notes, so we’re probably talking a month and a week away, maybe more…

      “Series F Redemption” refers to VEREIT’s redemption of up to $200 million of VEREIT’s Series F Preferred Stock, including accrued and unpaid dividends thereon, subject to the terms and conditions set forth in the related redemption notice, on or about 30 calendar days after pricing of this offering of notes.

Comments are closed.