COPT is giving the underwriters an option to purchase up to 390,000 shares over the next month, hence the range in expected net proceeds. COPT will be using the proceeds to repay borrowings under its unsecured revolving credit facility and for general corporate purposes.
The offering is expected to close on April 7. The joint book-running managers for this offering are Merrill Lynch and KeyBanc Capital Markets. COPT did not return a call to GlobeSt.com in time for publication.
In general, more REITs are turning to issuing equity to maintain liquidity. "In the past two weeks we have seen four companies issue equity," managing director and US REIT Group Head Steven Marks, tells GlobeSt.com. These were Alexandria, Simon Property Group, AMD Property Co. and Kimco Realty. Marks says he cannot comment on COPT, but these four "all raised common equity in an effort to delever and recapitalize their companies."
Clearly REITs realize that recapitalization makes sense for the long term; there is a dichotomy developing among these companies though, based on their financial situation, Mark says. "Companies will issue common equity in situations where it doesn't result in substantial dilution. But some REITs are finding themselves in the position of having to issue equity."
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Erika Morphy
Erika Morphy has been writing about commercial real estate at GlobeSt.com for more than ten years, covering the capital markets, the Mid-Atlantic region and national topics. She's a nerd so favorite examples of the former include accounting standards, Basel III and what Congress is brewing.
