Kimco brings adjusted new deal; First Potomac heralds plan for add-on; Ally preferreds rise

By Stephanie N. Rotondo

Portland, Ore., March 9 - The primary preferred stock market was holding its own Friday.

Kimco Realty Corp. brought a $400 million issue of 6% class I cumulative redeemable preferreds. A trader said Thursday that talk was around 6.125% but told Prospect News Friday that talk had been revised to 6%.

Meanwhile, First Potomac Realty Trust said it will price an add-on to its 7.75% series A cumulative redeemable preferreds. The company originally sold $115 million of the preferreds in January.

Away from new issues, the secondary market was "up slightly," one trader said.

Another market source said it was "kind of a mixed day on improved volume."

Ally Financial Inc. was on the rise in active trading as news outlets reported that the Detroit-based financial services company had potentially hooked a buyer for its struggling Residential Capital LLC unit.

Kimco adjusts talk, prices

Kimco Realty launched a $400 million sale of 6% class I cumulative redeemable perpetual preferred stock.

The deal was originally announced Thursday and price talk was set at 6.125%. However, early in Friday's session, a trader said that talk had been revised to 6%.

Pricing came after the market closed on Thursday.

Pre-pricing, a trader placed the issue at $24.80. Post-pricing, a source quoted the paper at $24.85 bid, $24.90 offered.

The public offering price is $25.00. The purchase price for the underwriters was $24.2125 for shares sold to retail accounts and $24.50 for shares sold to institutional investors.

The company intends to list the preferreds on the New York Stock Exchange. Settlement is expected March 20.

Bank of America Merrill Lynch, Citigroup Global Markets Inc., UBS Securities LLC and Wells Fargo Securities LLC are the joint bookrunning managers. J.P. Morgan Securities LLC and RBC Capital Markets LLC are the joint lead managers.

The co-managers are Deutsche Bank Securities Inc., Raymond James & Associates Inc., Credit Suisse Securities (USA) LLC, Morgan Keegan & Co. Inc., Piper Jaffray & Co., Stifel, Nicolaus & Co. Inc., BNY Mellon Capital Markets LLC and Scotia Capital (USA) Inc.

Proceeds will be used for general corporate purposes, including the reduction of borrowings under a revolving credit facility maturing in October 2015 by at least $225 million and the redemption of shares of preferred stock when they become callable.

Kimco is a New Hyde Park, N.Y.-based real estate investment trust.

First Potomac plans add-on

First Potomac Realty Trust will price an add-on to its 7.75% series A cumulative redeemable perpetual preferreds, the company said in a filing with the Securities and Exchange Commission on Friday.

The company originally issued 4.6 million preferreds on Jan. 18. The preferreds (NYSE: FPOPA) closed down 39 cents, or 1.52%, at $25.29.

Wells Fargo Securities is the bookrunning manager.

Proceeds will be contributed to the company's operating partnership in exchange for preferred partnership units. The operating partnership will then use the funds to repay a portion of an outstanding balance under the company's unsecured revolving credit facility and for working capital and general corporate purposes.

First Potomac is a Bethesda, Md.-based REIT.

Ally boosted on ResCap sale

Ally Financial has potentially hooked Fortress Investment Group LLC as a buyer for its money-losing mortgage unit Residential Capital, according to news reports.

The news helped Ally's preferreds gain ground in active trading.

The 8.125% fixed-to-floating trust preferreds (NYSE: ALLYPA) moved up 54 cents, or 2.35%, to $23.52, with about 1.57 million shares changing hands.

The 8.5% series A preferreds (NYSE: ALLYPB) meantime earned 33 cents, or 1.51%, to close at $22.22, on about 332,000 shares trading.

According to news reports, ResCap would likely be sold as part of a pre-packaged bankruptcy plan. Currently, there are 22 mortgage-linked securities lawsuits facing the unit, which has dragged down Ally's bottom line. If Ally were to keep the unit, it would also have to deal with $2.4 billion of maturing debt over the next three years.

ResCap is based in Minneapolis.

Public Storage buyers 'recycle'

Public Storage's 6.625% series M cumulative preferreds (NYSE: PSAPM) were among the day's most actively traded issues as investors prepared for an upcoming redemption.

The preferreds ended flat at $25.43, and a market source said that was not uncommon as investors seek to "recycle" old issues for new securities.

The Glendale, Calif.-based REITs latest issue, the 5.75% series T cumulative preferreds - which priced Wednesday - were seen at $24.85 in the gray market shortly before the market closed. After the bell, the preferreds were placed at $24.87, with a volume-weighted average price of $24.85.

Proceeds from the sale of the Ts will be used to take out the Ms.

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