Michael Terry's  Instablog

Yesterday we noted how REITs have been tapping the unsecured debt markets.  After FRT announced their deal yesterday, Weingarten tried to tap for $100MM but the investor interest wasn't there and it looks like they will carry their deal over to todays business (looking north of 8%). 

Prologis is tapping the unsecured market today for $350MM at around +450ish (think low 7% range).  If you recall, PLD was thought to be on deaths door last year (and earlier this year) where their bonds (18s) traded down to the 30s to yield over 25%.  PLD has changed the covenant package back to the "old school" covenants by tightening up the unencumbered asset ratio (1.50:1 from the 2005 1.25:1) and the debt incurrence test (60% of total assets from the '05 65%).
In other REIT financing news, Westfield Group received commitments of more than $1.4 billion for a $1.25 billion loan after courting investors in Asia, three people familiar with the situation said.  This looks to be a forward start commitment to refi their 2011 revolver maturity.

While BoneYard agrees that REITs are compelling (much less so than a quarter ago, but...) it appears that they may be getting ahead of themselves.  Then again, the high vol, beta trade is alive and well (more on that later).


Disclosure:  long PLD bonds and preferred, long FRT bonds, long WRI bonds and lonf WDCAU bonds.