VEREIT to Redeem 6 Million Preferred Shares

Giant triple net lease REIT VEREIT (VER) has announced that they will be redeeming 6 million shares of the 6.70% perpetual preferred (VER-F) issue.

Last week the company sold some debt and at the time stated they would likely redeem more of this giant sized preferred issue.

Bob-in-DE caught the announcement today that they will redeem 6 million shares for $25 plus accrued dividends on 7/22/2020. The 6 million shares is around 19% of the total currently outstanding–this will leave around 24.9 million shares yet outstanding.

VER-F is a monthly payer and goes ex-dividend on 6/30/2020 for 13.9 cents for payment 7/15. There will be an additional ‘stub’ dividend payment for 7/15/2020 to 7/21/2020 of 3.3 cents on the redeemed shares.

VER-F is now trading around $25.05.

It is likely that in the next few days you will see around 19% of your shares segregated in your brokerage account if you are a holder. NOTE I hold a full position of this one.

The company announcement is here.

5 thoughts on “VEREIT to Redeem 6 Million Preferred Shares”

  1. Rob is 110% correct. They could have, they should have. Of course if they did start buying the price would have moved up accordingly. It was like 2008 all over again. You could have made the same statement about most every one of the 500 issues outstanding. So they weren’t the only ones to have missed this opportunity!!

    And that being said I should have been doing the same. Instead what I did was hold on and said prayers! You could see where the market grouped your issues based on the lows. 2-5 bucks total dung. 8-11 double B like. 14-17 pretty good like BBB’s. 17-18 very good. 22 or higher? Like a top tiered investment.

    Keep in mind GNMA’s went from 102 to 80 in 1 weekend!

  2. My goodness. VER could have bought back these 6 million shares in the open market 60 days ago at prices well below $20/share. Now they are redeeming at $25.03? On March 18th VER+F actually traded for as low as $12.52.

    If their intent was to continue to redeem this preferred, very foolish if they did not buy back shares of VER+F when it was hit so hard during the lockdowns. Would have saved the company $30 – $40 million. Real money.

    1. Don’t they have to redeem at $25? i guess they could buy on the open market and redeem from themselves. Is that doable?

    2. Rob in Vegas,
      What your missing is that they probably didn’t have the cash to buy anything at that time. They issued new debt and are using some of that cash now. They either would not have been able to issue the debt at all in March or it would have been too expensive.

      In addition, an open market purchase plan needs to be announced before it is implemented and that tends to drive the price up quite a bit from previous levels.

  3. I just purchased a few hundred at 25.05. It seems like a fairly safe trade.

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