Federal Realty launches $400M exchangeable senior notes offering

Federal Realty Investment Trust (NYSE: FRT) announced that its operating partnership, Federal Realty OP LP, has launched a private placement of $400 million in aggregate principal amount of exchangeable senior notes due 2031.

The offering is being made to qualified institutional buyers under Rule 144A of the Securities Act of 1933. The partnership has also granted initial purchasers an option to buy up to an additional $60 million in notes during a 13-day period beginning on the first issuance date.

The notes will be senior unsecured obligations with interest payable semi-annually. Subject to certain conditions, the notes will be exchangeable for cash up to the principal amount, with any excess exchange value settled in cash, common shares of Federal Realty, or a combination, at the partnership's election. The interest rate, exchange rate, and other terms will be set at pricing.

The partnership intends to use net proceeds to fund capped call transactions, repay existing debt, and for general corporate purposes. Pending those uses, proceeds may be invested in short-term instruments or used to temporarily reduce amounts outstanding under its revolving credit facility.

In connection with the offering, Federal Realty and the partnership expect to enter into capped call transactions with one or more initial purchasers or their affiliates. These transactions are intended to reduce potential dilution to common shareholders upon any note exchange or offset cash payments above the principal amount of exchanged notes, subject to a cap.

The notes and any common shares issuable upon exchange have not been registered under the Securities Act or any state securities laws and may not be offered or sold in the United States without registration or an applicable exemption.

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