PrefBlog

Brookfield Office Properties Inc. has announced:

the completion of its previously announced Preferred Shares, Series GG issue. The offering was underwritten by a syndicate of underwriters led by TD Securities Inc., CIBC Capital Markets, RBC Capital Markets and Scotiabank. On April 26, 2017, the syndicate agreed to purchase 10,000,000 Preferred Shares, Series GG at C$25.00 per share and has since exercised its option to purchase an additional 1,000,000 shares at the same offering price.

The Preferred Shares, Series GG will yield 4.85% annually for the initial period ending June 30, 2022. The net proceeds of the issue will be used by Brookfield Office Properties for general corporate purposes which may include the redemption of existing preferred shares.

The Preferred Shares, Series GG will commence trading today on the Toronto Stock Exchange under the ticker symbol BPO.PR.G.

BPO.PR.G is a FixedReset, 4.85%+374M485, announced 2017-04-26. It will be tracked by HIMIPref™ but relegated to the Scraps index on credit concerns.

DBRS has assigned a Pfd-3 rating to the issue:

DBRS Limited (DBRS) has today assigned a rating of Pfd-3 with a Stable trend to the $275 million Class AAA Preference Shares, Series GG (Series GG Preferred Shares) issued by Brookfield Office Properties Inc. (Brookfield).

The Series GG Preferred Shares rank on parity with Brookfield’s existing Class AAA preference shares, junior to Brookfield’s Class A and Class AA preference shares, and in priority to the Company’s Class B preference shares and common shares.

DBRS understands that the net proceeds from the sale of the Series GG Preferred Shares will be used to redeem Brookfield’s Class AAA Preference Shares, Series G and Class AAA Preference Shares, Series J and to repay part of the amounts drawn on the Company’s corporate revolver.

The redemption of BPO.PR.U and of BPO.PR.J noted by DBRS have been reported on PrefBlog.

The issue traded 380,392 shares today in a range of 24.75-95 before closing at 24.92-93. Vital statistics are:

As previously discussed, I think this issue is expensive, as illustrated by the Implied Volatility analysis:

Click for Big

According to me, a price of 23.77 would be appropriate for this issue, given the levels of its peers. But, as also discussed, this depends on my assignment of a zero value to the minimum reset rate guarantee, which is not a universally popular opinion.

This entry was posted on Thursday, May 4th, 2017 at 11:48 pm and is filed under Issue Comments. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.