BPO.PR.A Firm On Excellent Volume

Brookfield Office Properties Inc., a division of Brookfield Property Partners (NYSE: BPY; TSX: BPY.UN), has announced:

the completion of its previously announced Preferred Shares, Series AA issue in the amount of C$300 million. The offering was underwritten by a syndicate led by RBC Capital Markets, CIBC, Scotia Capital Inc. and TD Securities Inc.

Brookfield Office Properties issued 12.0 million Preferred Shares, Series AA at a price of C$25.00 per share yielding 4.75% per annum for the initial period ending December 31, 2019. Net proceeds from the issue will be used for general corporate purposes, including, but not limited to, repayment of revolving debt, acquisitions, capital expenditures and working capital needs. There are no acquisitions at this time for which Brookfield Office Properties is intending to use the net proceeds of this offering.

The Preferred Shares, Series AA will commence trading on the Toronto Stock Exchange on October 23, 2014 under the ticker symbol BPO.PR.A.

BPO.PR.A is a FixedReset, 4.75%+315, announced October 7. The issue will be tracked by HIMIPref™ but relegated to the Scraps index on credit concerns.

BPO.PR.A traded 1,154,714 shares today (consolidated exchanges) in a range of 24.92-25.01 before closing at 24.96-00, 3×177. Vital statistics are:

Maturity Type : Limit Maturity
Maturity Date : 2044-10-23
Maturity Price : 23.13
Evaluated at bid price : 24.95
Bid-YTW : 4.52 %

Implied Volatility is still very high, implying that

  • investors have incorporated a lot of expectation of price directionality in their forecasts for these issues, and
  • investors are paying too much for the lower-reset issues, relative to the higher-reset issues

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