Health Care REIT (HCN) new issue 03/01/11

$625m (93.75m) perp prf coming tonight from UBS/MER/DB/JPM/WFC.
Terms: 6.5-7% up 15-20%, s-c@130 yr8, pctns (div> new 0.715). COncurrent stk of 25m (3.75m). UOP=genesis assets.
3 existing issues most notably 1.3 yr 4.75% ’27=17iv (25bp)
4 yr 3%=19iv (90bps) or L+150ics.
5 yr CDS = 90bps. Tough to apply 2.5x CDS formlua in cycle.
We’ll use L+350
No leaps
ADV = 1.6m, need to dscnt for structure existiing 3% valuation & tight credit/low vol env. We’ll use 15%.
Theo 104.2/107.2 rich/mid. Eg’s of preferreds from prev cycle; ARE (7% up 15% 03/08), DLR (5.5% up 17.5%) so priced in line. No obv stk switch h/ever being paid L+500 to own just the credit option (0 vol) on BBB- prf is not bad. Guys will play stk, big deal but will get done in this mkt. Prefer mids obviously

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