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Investing

GOV Secondary: 7% Government Dividend Goes On Sale

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By Jon C. Ogg Updated Published
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Government Properties Income Trust (NYSE: GOV) may be offering new shareholders another chance to get in. The government-property management REIT announced on Monday that it has commenced a public offering of 7,000,000 common shares. Based upon the current discount to the closing bell, the offering would raise close to $170 million. The market capitalization at the close was $1.15 billion.

The real estate investment trust said that it plans to use the net proceeds of this offering to repay amounts outstanding under its revolving credit facility and for general business purposes. Those general purposes were said to include potential acquisitions.

The joint book-running managers were listed as Morgan Stanley, BofA Merrill Lynch and RBC Capital Markets. The co-lead managers for this public secondary offering are Citigroup, Jefferies and UBS Investment Bank. It is contemplated that the underwriters will also be granted a 30-day option to purchase up to an additional 1,050,000 common shares, although we do not use the over-allotment option shares in calculating that $170 million projected amount.

We would note that this REIT is one of the few that still yield close to 7%. That being said, the REIT closed at $24.35 and hit a high of $24.67 today which is only 20-cents shy of the 52-week high. Government Properties Income Trust is down 3.5% at $23.68 after the news of the offering. Thomson Reuters lists a consensus price target of $22.50 on this one, but that price target may be lifted after the analysts get to cover this one after the offering.

JON C. OGG

Photo of Jon C. Ogg
About the Author Jon C. Ogg →

Jon Ogg has been a financial news analyst since 1997. Mr. Ogg set up one of the first audio squawk box services for traders called TTN, which he sold in 2003. He has previously worked as a licensed broker to some of the top U.S. and E.U. financial institutions, managed capital, and has raised private capital at the seed and venture stage. He has lived in Copenhagen, Denmark, as well as New York and Chicago, and he now lives in Houston, Texas. Jon received a Bachelor of Business Administration in finance at University of Houston in 1992. www.247wallst.com.

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