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Brandywine to Raise $50M in Preferred Stock Offering

PLYMOUTH MEETING, PA-In addition to offering two million shares of preferred stock through Bear Stearns, the REIT moves to eliminate the cost of 8.75% dividends on preferred stock owned by Five Arrows Realty Securities.

By Marita Thomas | Updated on December 30, 2003

PLYMOUTH MEETING, PA-Two financial transactions by locally based Brandywine Realty Trust strengthened its balance sheet. One eliminates Brandywine’s high, 8.75% fixed dividend cost on preferred stock owned by Five Arrows Realty Securities III LLC; the other is an offering of two million shares of preferred stock at $25 per share, which will enrich the bottom line by $50 million.

Five Arrows is converting 25%, or slightly fewer than 1.1 million shares of its total holdings of series B cumulative convertible preferred stock in Brandywine for the same number of shares of common stock in the company. Brandywine is redeeming, in effect, repurchasing, the remaining 75% of Five Arrows’ series B shares for approximately $27.50 a share, or a little more than $90 million in cash. The par value of the initial private transaction with Five Arrows, which took place in 1998, is about $105 million, according to Christopher P. Marr, Brandywine’s CFO.

In addition, Brandywine is purchasing warrants held by Five Arrows entitling the REIT to purchase up to 250,000 shares of common stock at a strike price of $24 per share, or almost $1.2 million. On completion of these transactions, Five Arrows will own common shares representing approximately 2.67% of all of Brandywine’s outstanding common stock. As a result of these transactions with Five Arrows, Marr tells GlobeSt.com, “We eliminate a very high fixed charge for the 8.75% dividend.”

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