Cherry Hill brings inaugural preferred issue; Farmland prices; Invesco Mortgage frees up

By Stephanie N. Rotondo

Seattle, Aug. 10 – A familiar name was crossing the preferred stock tape on Thursday as Cherry Hill Mortgage Investment Corp. announced plans to sell series A cumulative redeemable preferreds.

After the bell, the company priced the $55 million deal at par to yield 8.2%.

Price talk was 8.25% on the inaugural issue, a market source reported.

A trader saw the issue at $24.60 bid in the gray market.

This isn’t the first time the Moorestown, N.J.-based real estate investment trust attempted to tap the preferred space. Back in December 2015, the company announced a similar deal, with price talk around 9% and the deal size slated to be $50 million. But within one day of announcing the new issue, Cherry Hill pulled it, citing unfavorable market conditions.

This go-round, Morgan Stanley & Co. LLC and RBC Capital Markets LLC are the joint bookrunners. Citigroup Global Markets Inc. and J.P. Morgan Securities LLC are the lead managers.

In the previous attempt, Morgan Stanley, UBS Securities LLC, Keefe, Bruyette & Woods Inc. and Citigroup were the joint bookrunning managers. Barclays, FBR Capital Markets & Co., JMP Securities LLC and Ladenburg Thalmann & Co. Inc. were the co-managers.

Farmland Partners Inc. also priced a deal, after announcing the offering on Monday.

The Denver-based REIT sold $131.25 million of 6% series B participating preferred stock.

Raymond James & Associates Inc. and Jefferies LLC ran the books.

The preferreds have an initial liquidation preference of $25.00 a share. That amount could be increased by an additional farmland value appreciation value (FVA), subject to certain caps, until Sept. 30, 2024.

The issue becomes redeemable after Sept. 30, 2021.

Prior to Sept. 30, 2024, no dividends will accrued or be paid on any FVA amount.

If a redemption occurs prior to Sept. 30, 2024, the redemption price will include a premium amount.

The company also has the option to convert the preferreds to common stock after Sept. 30, 2021. Holders also have a right to force a conversion upon a change of control.

Recent deals active

As for deals from Wednesday, Invesco Mortgage Capital Inc.’s $250 million of 7.5% fixed-to-floating rate series C cumulative redeemable preferred stock freed to trade during Thursday trading.

The issue was assigned a temporary symbol, “IVSOP.”

At day’s end, the preferreds were seen at $24.80, off 3 cents.

Earlier in the day, the preferreds were pegged at $24.85 bid, $24.90 offered.

That was down from par in the previous session.

The issue was among the day’s most active securities, trading almost 882,000 times.

The deal came at the tight end of the revised 7.5% to 7.625% price talk. Initially, price talk was 7.625%.

Morgan Stanley, BofA Merrill Lynch, UBS Securities and J.P. Morgan Securities ran the books.

Dividends will be fixed until Sept. 27, 2027. After that, the rate will float at Libor plus 528.9 basis points.

The preferreds also become redeemable on Sept. 27, 2027 at par plus accrued dividends. The issue can also be redeemed upon a change of control.

The Atlanta-based real estate investment trust plans to use proceeds for general corporate purposes.

Meanwhile, Kimco Realty Corp.’s $225 million of 5.125% class L cumulative redeemable preferreds – a deal priced Monday – moved up 12 cents to $24.72.

Over 400,000 of those preferreds were exchanged.

The issue freed to trade early Tuesday, trading under the temporary ticker “KIMRP.”

The new preferreds came tight to the 5.125% to 5.25% price talk. The size of the deal was upped from $150 million.

BofA Merrill Lynch, Morgan Stanley, UBS Securities and Wells Fargo Securities LLC ran the books.

Digital Realty Trust Inc.’s $200 million of 5.25% series J cumulative redeemable preferreds were also on the active side, trading over 741,000 times during the session.

The paper fell 4 cents to $24.55.

The deal came Aug. 2, tighter than the 5.375% price talk and upsized from $100 million.

BofA Merrill Lynch, Citigroup and Wells Fargo were the bookrunners.

The issue has a temporary ticker, “DGGTP.”

Rounding out the recent issues, Public Storage’s $300 million of 5.05% series G cumulative preferred stock listed on the New York Stock Exchange on Thursday under the ticker symbol “PSAPrG.”

The preferreds slipped 2 cents to $24.88.

That deal priced July 31, coming in line with revised price talk. Initial price talk was 5.125%.

The deal also came upsized from $100 million.

BofA Merrill Lynch, Morgan Stanley, UBS and Wells Fargo ran the deal.

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