Summary
- What are the key metrics of the new preferred stock - AHH-A.
- The company's leverage seems good.
- The new IPO is overvalued compared to the sector.
- Where in the context of all REIT fixed-rate preferred stocks does AHH-A stand?
- Looking for more? I update all of my investing ideas and strategies to members of Trade With Beta. Get started today »
Introduction
Our goal is to present to you our IPO analysis for every new fixed-income security that enters the market and to find out if there is any trading potential. In this article, we want to shed light on the newest preferred stock issued by Armada Hoffler Properties (AHH). Even though the product may not be of interest to us and our financial objectives, it definitely is worth taking a look at.
The New Issue
Before we submerge into our brief analysis, here is a link to the 424B2 Filing by Armada Hoffler Properties - the prospectus.
Source: SEC.gov
For a total of 2.2M shares issued, the total gross proceeds to the company are $55M. You can find some relevant information about the new preferred stock in the table below:
Source: Author's spreadsheet
Armada Hoffler Properties 6.75% Series A Cumulative Redeemable Perpetual Preferred Stock (AHH-A) pays a fixed dividend at a rate of 6.75% and has a par value of 25. The new issue has no Standard & Poor'srating, pays quarterly dividends, and is callable as of 06/18/2024. Currently, the new issue trades above its par value at a price of $26.28 and has a 6.42% Current Yield and YTC of 5.57%. The dividends paid by this preferred stock are not eligible for the preferential 15-20% tax rate on dividends. They are also not eligible for the dividend received deduction for corporate holders. This means that the "qualified equivalent" Current Yield and YTC would be 5.35% and 4.64%, respectively.
