NORTH BETHESDA, Md. - Federal Realty (NYSE:FRT) Investment Trust (NYSE:FRT) disclosed the pricing of $425 million in exchangeable senior notes due in 2029 by its operating partnership, Federal Realty OP LP. The private offering, aimed at qualified institutional buyers, saw an increase from the previously announced amount and includes an option for the purchase of an additional $60 million in notes. The transaction is set to close on January 11, 2024, pending customary conditions.
The notes, unsecured senior obligations of the Partnership, will bear interest at a rate of 3.25% per annum, with semi-annual payments starting July 15, 2024, and will mature on January 15, 2029. They are exchangeable under certain conditions, with the initial exchange rate set at 8.1436 common shares per $1,000 principal amount, subject to adjustments. The Partnership can redeem the notes after January 20, 2027, under specific terms.
Federal Realty anticipates approximately $413 million in net proceeds, or $471 million if the additional notes option is fully exercised. The funds are intended for debt repayment and general corporate purposes, with some allocated to capped call transactions designed to minimize potential dilution from the exchange of notes.
The capped call transactions have an initial cap price of approximately $143.26 per share, a 40% premium over the common shares' last reported sale price. These transactions are expected to reduce potential dilution or offset cash payments above the principal amount for exchanged notes, subject to a cap.
The offering's announcement includes a reminder that the notes and common shares issued upon exchange have not been registered under the Securities Act or state securities laws and are offered only to qualified institutional buyers.
Federal Realty, known for its retail-based properties in coastal markets and urban, mixed-use neighborhoods, has a history of delivering sustainable growth and holds a record for consecutive annual dividend increases within the REIT industry.
This news is based on a press release statement.
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