The securities are priced to yield 6.98% interest and reach maturity in 10 years.
The REIT will used the proceeds to retire a $57.5-million medium-term note that matures this month and to pay down the company's line of credit.
New York-based Merrill Lynch is the lead underwriter. New York-based Bear Sterns & Co. and Los Angeles-based Wells Fargo Securities are co-managers.
Colonial has a total market capitalization of $2.7 billion, the company says in a prepared statement.
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