PHILADELPHIA-RAIT Financial Trust has offered 10 million shares of its common stock at $34 a share. The locally based REIT anticipates net proceeds of $317.6 million after underwriting discounts, commissions and estimated offering expenses. The offering is expected to close on Jan. 24.
In addition, RAIT has granted the underwriters an over-allotment option for another 1.5 million shares, exercisable within 30 days. If fully exercised, this would generate another approximately $47.9 million in net proceeds.
According to a prospectus filed with the SEC, the company has requested that certain of the underwriters reserve up to 100,000 shares for sale to its employees, officers and trustees. Such purchases, which may or may not be exercised in whole or in part, would reduce the number of shares available to the public.
RAIT expects to use a portion of the proceeds to repay some of the outstanding debt under its repurchase agreements maintained by Taberna Realty Finance Trust, also based here. On Dec. 11, RAIT Investment Trust merged with Taberna in a transaction valued at approximately $606 million to form RAIT Financial Trust. Betsy Cohen is chairman of the newly formed company, and Daniel Cohen, her son and former CEO of Taberna, is the new company's CEO.
According to the SEC filing, as of Dec. 31, the debt under the repurchase agreements was approximately $319.5 million at a weighted average interest rate of 5.6%, contracted to mature this month. A portion of the proceeds from the stock offering may also be used for general purposes, including capital expenditures and working capital.
Friedman Billings Ramsey & Co. Inc. and Bear, Stearns & Co. Inc. are joint book-running managers for the offering. UBS Investment Bank, RBC Capital Markets, KeyBanc Capital Markets, Stifel Nicolaus, and BMO Capital Markets are co-managers.
The company retained its former RAS ticker symbol on the NYSE. Shares of RAS reached a 52-week high of $35.16 a share, following announcement of the offering, then dropped back to $34.85 in early trading on Jan. 19. The 52-week pre-merger low of $24.81 a share occurred on May 17, 2006.
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