Eastern United States shopping mall owner Pennsylvania Real Estate Investment Trust (NYSE:PEI) has sold a large preferred stock offering. The offering is composed of 6,000,000 shares of $25 shares with an over allotment available to the underwriters of 900,000 shares (if demand is high enough the underwriter can sell these over allotment shares). The company has stated their intention to redeem another preferred issue (NYSE:PEI-A) which is currently outstanding once the optional redemption period arrives on 4/20/2017.
The new offering has a coupon of 7.2%, which is a relatively decent coupon, for a company that has performed well with renewal leases for their properties being at rates that are 10-12% above previous lease rates.
Being a REIT the dividends from these shares will be “non-qualified” income (not eligible for the lower capital gains tax rate treatment). As is normal for REIT preferred dividends they will be cumulative meaning that if they are not declared and paid they will accrue and will have to be paid prior to any common share dividends being paid.
The new shares are now trading on the OTC Grey Market under the temporary ticker symbol of PNYLP. Shares will be trading on the NYSE within the next couple of days under their permanent ticker of PEI-C. For those not familiar with the OTC Grey Market and how to potentially snag some shares at “wholesale” you can read our primer here.
To get more information on preferred stocks and exchange traded debt (baby bonds), screen them, set up your own portfolio and receive email alerts, go to www.preferred-stock.com now.