Daiwa color
$250m ($46.9m) sen sec cb coming tonight from GS/BARC. Terms: 7yr 3.75%-4.25% up 20-25%, call 4life @130% w/NO cpn make whole (*** A coupon make-whole was added to the deal at the end ***) UOP = repay sec debt. $3B RE co which operated in high barrier to entry mkt in 27 states. Portfolio is 90% secured (co taps $450m sec bank line then the # increased). Has sold equity & assets to survive downturn but bulk of mortgage debt comes due in YE 12. LTM ebitda = 531m FCF = -372m, PF debt = 7.57B cash = 3.2b. We’d assume B- and L+600.
Fact: only reits that trade >20iv are in index (SLG to OFC to KRC) ie the whole spectrum trade < 20iv. Well assume 20 vol. Theo = 99.8785 We are a starving asset class but a 7yr structure. callable is not the answer
AVOID
Credit color
Real estate operating co with holdings in 27 states & DC. Portfolio incl retail, office, apartment & military housing.
PF Cash $320m
PF Debt $7.5b
LTM EBITDA $531m
LTM FCF -$372m
Debt/Cap 70%
Mkt Cap $3b
FCE has a diversified portfolio in high barrier to entry mkts. Have weathered downturn okay by selling assets & equity and curtailing dev. Able to eliminate div in late 2008 since they are not a REIT. Portfolio is fully encumbered w/secured debt nearly 90% of total. Significant mortgage debt due thru late 2012 ~2.5b. 4 dev projs yet to complete, most financing done, new secured bank line w/$450m due 2014 most available.
Our assigned spread L+600