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Tuesday, 09 November 2010

Boston Properties Sells Notes at Lowest Yield in More Than 4 Years

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Commercial Real Estate Direct Staff Report

Boston Properties Inc. yesterday priced $850 million of senior notes at a price that would result in a yield to investors of 4.213 percent - the lowest yield for an issue of unsecured notes by a REIT in more than four years.

The bonds mature in 2021 and carry a coupon of 4.125 percent, the lowest coupon for an issue of non-convertible REIT bonds since 2006. The Boston REIT priced the notes at 99.26 percent of par to yield 4.213 percent, or 165 basis points more than Treasurys. That's close to the 160-bp spread that Simon Property Group attained with a $900 million bond issue in August.

But because Treasury yields have narrowed since then, the Boston Properties notes, rated Baa2 by Moody's, A- by S&P and BBB by Fitch, will produce a yield lower than Simon's.

Boston Properties' notes were issued through underwriters led by Citigroup, Deutsche Bank Securities, JPMorgan Securities, Morgan Stanley, US Bancorp Investments and Wells Fargo Securities.

The REIT said it would use proceeds of the notes to repay those that don't come due until 2013, and pay a coupon of 6.25 percent, as well as for general business purposes that include funding acquisitions.

The rally in Treasurys, driven by the Federal Reserve Bank's efforts to monetize a big slug of the federal government's debt, has resulted in a substantial tightening of Treasury rates. The benchmark 10-year bond had tightened to 2.53 percent last Thursday from 2.75 percent a week earlier and 3.57 percent a year ago. Yesterday, they closed at a yield of 2.6 percent.

Shrinking Treasury yields and investors' efforts to seek yield will likely bode well for other REITs. Indeed, AMB Property is planning to issue additional notes, just three months after it sold $300 million of bonds at a yield of 4.682 percent, and AvalonBay Communities Inc. is also planning to issue bonds.

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

Copyright © 2010 Commercial Real Estate Direct www.crenews.com


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Additional Info

  • Syndicate to Realpoint: No
  • Subject: REIT Unsecured Debt (UNSEC), REITS -general (REITS)
  • Deal Name: Bear Stearns Commercial Mortgage Securities Trust, 2006-PWR12
  • Company: Bradley Real Estate
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Data Digest







Top Bookrunners Domestic, Private-Label CMBS - 2017
Investment Bank #Deals Vol$mln MktShr%
Goldman Sachs 17.59 11,819.34 13.68
JPMorgan Securities 14.52 10,968.11 12.70
Citigroup 12.04 10,012.71 11.59
Wells Fargo Securities 14.02 9,936.06 11.50
Deutsche Bank 12.55 9,879.74 11.44




cppichart FP



CMBS 2.0 Spreads


Top CMBS Loan Contributors - 2017
Lender #Loans Vol$mln MktShr%
Goldman Sachs 146.89 11,719.34 13.63
JPMorgan Chase Bank 117.68 10,114.14 11.76
Deutsche Bank 198.48 9,689.97 11.27
Morgan Stanley 166.18 8,539.78 9.93
Citigroup 199.05 8,088.24 9.41





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shouldn’t be a surprise as it comes while the yield from 10-year Treasury bonds, the benchmark against which most REIT’s price their bonds