New Issue: BPO FixedReset 5.15%+300

Brookfield Office Properties has announced:

that it has agreed to issue to a syndicate of underwriters led by RBC Capital Markets, CIBC, Scotia Capital Inc. and TD Securities Inc., for distribution to the public, eight million Preferred Shares, Series P. The Preferred Shares, Series P will be issued at a price of C$25.00 per share, for aggregate proceeds of C$200 million. Holders of the Preferred Shares, Series P will be entitled to receive a cumulative quarterly fixed dividend yielding 5.15% annually for the initial 6 ½-year period ending March 31, 2017. Thereafter, the dividend rate will be reset every five years at a rate equal to the five-year Government of Canada bond yield plus 3.00%.

Holders of Preferred Shares, Series P will have the right, at their option, to convert their shares into cumulative Preferred Shares, Series Q, subject to certain conditions, on March 31, 2017 and on March 31 every five years thereafter. Holders of Preferred Shares, Series Q will be entitled to receive cumulative quarterly floating dividends at a rate equal to the 90-day Government of Canada Treasury Bill yield plus 3.00%.

Brookfield Office Properties has granted the underwriters an option, exercisable in whole or in part anytime up to two business days prior to closing, to purchase an additional two million Preferred Shares, Series P at the same offering price. Should the option be fully exercised, the total gross proceeds of the financing will be C$250 million.

The Preferred Shares, Series P will be offered by way of a prospectus supplement to the short-form base shelf prospectus of Brookfield Office Properties dated December 15, 2009. The prospectus supplement will be filed with securities regulatory authorities in all provinces of Canada.

The net proceeds of the issue will be added to the general funds of Brookfield Office Properties and be used for general corporate purposes. The offering is expected to close on or about October 21, 2010.

Note that this issue has a long fixed-rate period of six and a half years; this allows BPO to use a GOC bond of longer term than normal to determine spread without compromising the issue structure (since they’re not a bank, they don’t have to worry about such things, but the underwriters are trying to keep things consistent).

This new issue joins two other BPO FixedResets:

BPO FixedReset Comparables
Ticker Initial Dividend Issue Reset Spread First Reset Date Closing Quote, 2010-10-12
BPO.PR.L 1.6875 417bp 2014-9-30 26.45-64
BPO.PR.N 1.5375 307bp 2016-6-30 25.80-92

Update, 2010-10-21: The issue was quickly upsized:

Brookfield Properties Corporation (“Brookfield Office Properties”) (BPO: NYSE, TSX) announced today that as a result of strong investor demand for its previously announced public offering of 5.15% Preferred Shares, Series P, it has agreed to increase the size of the offering from C$200 million to C$300 million with no underwriters’ option, or from 8.0 million to 12.0 million Preferred Shares, Series P. The offering was underwritten by a syndicate led by RBC Capital Markets, CIBC, Scotia Capital Inc. and TD Securities Inc.

2 Responses to “New Issue: BPO FixedReset 5.15%+300”

  1. […] comes on top of the recent BPO 5.15%+300 FixedReset and news that the group is selling a chunk of Brookfield Renewable Power Fund. So they’ve […]

  2. […] issue is a FixedReset, 5.15%+300, announced October 13 with an original issue size of $200-million with a $50-million greenshoe; it was biggie-sized to […]

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