W. P. Carey Inc. said it has priced a public offering of 6 million shares of its common stock at $72 per share, a transaction that is expected to produce gross proceeds of $432 million. The news was followed by a 3.4% drop in the company's share price in premarket trading Wednesday.
The company granted underwriters a 30-day option to purchase up to an additional 900,000 shares. According to the filing, the shares are being sold on a forward basis in connection with forward sale agreements with Bank of America and JPMorgan Chase Bank.
W. P. Carey said the net proceeds from the offering will be used to fund potential future investments, to repay certain indebtedness - including amounts outstanding under its unsecured revolving credit facility - and for general corporate purposes. The company anticipates physically settling the forward sale agreements within approximately 24 months.
BofA Securities and J.P. Morgan are listed as the joint book-running managers for the transaction.
Company profile
W. P. Carey is an internally-managed, diversified real estate investment trust that primarily owns commercial properties leased on a long-term basis to companies in the United States and Europe. Its portfolio is composed mainly of single-tenant industrial, warehouse, and retail facilities.
Market and financing context
The sale is structured as a forward offering, with the forward sale agreements arranged with two large banking institutions. The company has set an approximate two-year window to physically settle those forward sales, and has given underwriters a short-term overallotment option equal to 15% of the primary offering size.
The stated uses for proceeds include funding new investments and retiring existing debt, including borrowings under the company's unsecured revolving credit facility, in addition to general corporate needs.
Implications for stakeholders
- Shareholders experienced an immediate market reaction, with the stock moving lower in premarket trading.
- Debt investors and lenders may see repayment activity depending on how the company allocates net proceeds toward indebtedness.
- Potential investors and analysts will note the forward-sale structure and the 24-month physical settlement timeline when assessing capital structure and dilution timing.