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Wednesday, 10 November 2010

AMB Prices $175Mln of Notes at 4.11 Percent Yield

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Commercial Real Estate Direct Staff Report

AMB Property Corp. yesterday priced $175 million of senior notes at a new record-low yield for a REIT.

The San Francisco owner of industrial properties last tapped the unsecured notes market last August when it sold $300 million of bonds with a coupon of 4.5 percent at a price that resulted in a yield of 4.682 percent. Those bonds had a seven-year term, like the latest notes issue.

This time around, the company was able to price $175 million of notes, with a coupon of 4 percent - the lowest coupon for an issue of REIT notes since September 2006 - at 99.307 percent of par, yielding 4.1111 percent or 225 basis points more than Treasurys.

In contrast, Boston Properties on Monday priced $850 million of notes to yield 4.213 percent. But those notes have a 10.5 year term. And earlier, Simon Property Group priced a 10-year issue at a price that would yield 4.422 percent.

AMB carries a rating of Baa1 from Moody's, and BBB from S&P and Fitch. Boston Properties has ratings of Baa2/A-/BBB, while Simon's ratings are A3/A-/A-.

The dropping yields are the result of the Federal Reserve's efforts to buy up to $600 billion of Treasury bonds, effectively monetizing some of the country's debt. That effort has shrunk long-term rates, prompting investors to hunt for yield and bolstering demand for REIT notes.

Wells Fargo Securities, JPMorgan Securities, Morgan Stanley and BofA Merrill Lynch were joint bookrunners for the AMB offering.

The REIT said it would use most of the proceeds of the offering to reduce borrowings under a $500 million unsecured credit facility that matures next July and for general corporate purposes.

Comments? E-mail Orest Mandzy, or call him at (267) 247-0112, Ext. 211.

Copyright © 2010 Commercial Real Estate Direct


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“The Weekly” is Commercial Real Estate Direct’s PDF newsletter, sent to subscribers every Friday morning. With over 100 news stories published on Commercial Real Estate Direct each week, “The Weekly” features the top stories in commercial real estate that industry participants need to know first. “The Weekly” also contains:

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Additional Info

  • Syndicate to Realpoint: No
  • Subject: REIT Unsecured Debt (UNSEC)
  • Deal Name: Bear Stearns Commercial Mortgage Securities Trust, 2006-PWR12
  • Company: AMB Property Corp.
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