Secondary Offerings Come On Strong From Housing & REITs (ARR, BZH, MTH, SNH)

ARMOUR Residential REIT, Inc. (NYSE: ARR) is selling 40,000,000 shares of common stock.  This would be close to $300 million versus a market cap of $1.3 billion. Deutsche Bank Securities, BofA Merrill Lynch and Citigroup are the book-running managers.  ARMOUR expects to grant the underwriters a 30-day option to purchase up to 6,000,000 additional shares of common stock. Use of Proceeds: “The Company intends to use the net proceeds of the offering to acquire additional agency securities as market conditions warrant and for general corporate purposes.”  Shares are indicated down 2.5% at $7.25 against a 52-week range of $5.40 to $7.68.

Beazer Homes USA Inc. (NYSE: BZH) only had a market cap of $334 million at Monday’s closing bell, but the company filed to sell $75 million of its common stock and 3,000,000 (equal to $75 million) of its tangible equity units (comprised of a prepaid stock purchase contract and an unsecured senior amortizing note due 2015). Use of proceeds: “The Company intends to use the net proceeds from these concurrent offerings for growth capital, including for approximately $100 million of potential land investments in Florida, California, Texas, North Carolina and Arizona, and for general corporate purposes, including the repayment of outstanding indebtedness.” Book-runners are listed as Credit Suisse Securities, Goldman Sachs & Co., Deutsche Bank Securities, and UBS Securities; co-managers are KKR Capital Markets and Moelis & Company. Shares are down over 8% at $3.10 against a 52-week range of $1.35 to $3.98.

Meritage Homes Corporation (NYSE: MTH) sold 2.3 million shares at $34.75 per share to raise more than $75 million in a deal which was raised from 2 million shares. Citigroup, J.P. Morgan and Deutsche Bank Securities were the joint book-running managers and BofA Merrill Lynch was co-manager; the syndicate was given a 345,000 share overallotment option.  Use of proceeds: “The Company plans to use the proceeds received from the offering for working capital and other general corporate purposes.” Shares closed at $35.38 and this is down only 0.5% at $35.21 against a 52-week range of $13.68 to $35.45.

Senior Housing Properties Trust (NYSE: SNH) is selling 8 million shares via Jefferies & Company, Citigroup, and UBS Investment Bank and the underwriters will have a 1.2 million share overallotment option. The filing shows an implied net proceeds of $172.8 million (or $198.7 million if overallotment is exercised) versus what was a $3.66 billion market value as of Monday’s close. The use of proceeds: “We intend to apply our net proceeds from this offering to repay amounts outstanding on our revolving credit facility. At July 6, 2012, we had $360.0 million outstanding under our revolving credit facility. The proceeds of those borrowings were used to repay the $225.0 million outstanding principal amount of our 8.625% unsecured senior notes due January 2012, to fund acquisitions and for general business purposes.” This REIT is indicated down 2.5% at $21.95 against a 52-week range of $19.09 to $24.64.

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JON C. OGG