Same Word, Opposite Animal: REIT vs. Biotech Follow-On Capital Raises Compared

Every figure below comes from Public Storage's 424(b)(5) prospectus supplement (July 2026) and Larimar Therapeutics' own pricing and closing press releases (February 2024), which we've covered individually in our Public Storage DCM breakdown and our Larimar ECM breakdown. This piece puts them side by side.

Side-by-side snapshot

Why the same company type almost never raises the same way twice

The single biggest structural difference between these two deals isn't the dollar amount, it's that Public Storage chose debt and Larimar had no realistic choice but equity, and that choice traces directly back to each company's underlying cash flow profile.

A REIT like Public Storage is, structurally, a cash-generating machine: it owns a large, stabilized portfolio of physical assets throwing off predictable rental income, which is exactly the kind of cash flow stream that debt investors want to lend against. Public Storage Operating Company issued $900 million of unsecured senior notes in two tranches, $400 million of 4.700% notes due 2032 and $500 million of 5.150% notes due 2036, fully and unconditionally guaranteed by the parent REIT, with the 2032 notes priced at 99.283% of face value and the 2036 notes at 98.553%. Debt investors are willing to lend at those relatively modest coupon rates specifically because Public Storage's rental income is stable enough to service fixed interest payments reliably for a decade or more, and because REITs are structurally required to distribute the vast majority of taxable income to shareholders as dividends, meaning equity issuance dilutes the existing shareholder base's claim on that income stream directly, which REITs and their investors are typically eager to avoid unless equity is specifically the cheaper or more appropriate capital source for a given use.

Larimar, by contrast, is a clinical-stage biotech with a lead compound still in development and no product revenue to speak of. There's no stable cash flow stream for a debt investor to underwrite against, and a biotech's entire enterprise value sits in the probability-weighted future value of clinical trial outcomes, an asset class debt investors are structurally unwilling to lend against at reasonable rates, because a binary trial failure could wipe out the company's ability to repay principal entirely. Equity is close to the only realistic financing tool available to a company in this position, which is why Larimar's proceeds were earmarked to support the development of nomlabofusp (CTI-1601) and other pipeline candidates, plus working capital and general corporate purposes including R&D expenses, money spent funding the very binary outcome that makes debt financing impractical in the first place.

Pricing logic: a discount to face value vs. pricing at the last trade

The two deals also price completely differently, and the difference reveals something about how each asset class is actually valued.

Public Storage's notes were priced at a small discount to face value (99.283% and 98.553%), standard investment-grade bond market convention, where the discount plus the stated coupon combine to produce the notes' effective yield to maturity, a figure investors compare directly against Treasury yields and other corporate bonds of similar credit quality and duration. The pricing mechanism is entirely about yield curve positioning relative to comparable fixed-income instruments.

Larimar's equity, by contrast, priced at exactly the prior day's closing stock price with no separate "yield" concept at all: the offering priced at $8.74 per share, the closing price of the stock on February 13, 2024, for gross proceeds of approximately $150.0 million before underwriting discounts and commissions. This is a common (though not universal) convention in biotech follow-on offerings, pricing directly at the last close, rather than at a discount, signals the underwriters judged demand strong enough that they didn't need to offer new investors a price concession to fill the deal. The upsized greenshoe exercise confirms that read: the underwriters exercised their option in full, bringing the total offering to 19,736,842 shares and aggregate gross proceeds to approximately $172.5 million, a full greenshoe exercise is the equity-market equivalent of a bond deal being oversubscribed, and both signal the same thing (demand exceeded the base deal size) through different mechanical instruments.

The protective mechanic that only shows up in deal-contingent debt

One feature of the Public Storage notes has no equivalent anywhere in the Larimar deal, because it only exists when debt proceeds are tied to a specific, not-yet-closed M&A transaction: the notes are linked to Public Storage's planned National Storage Affiliates acquisition, with protective covenants and a 101% mandatory redemption if the deal fails. This "special mandatory redemption" clause protects noteholders from a specific risk unique to acquisition-financing debt: if the underlying deal the debt was raised to fund never actually closes, noteholders don't want their capital trapped in notes issued for a purpose that no longer exists, potentially at a below-market rate locked in months earlier. The 101%-of-principal redemption trigger, a modest premium over par, compensates noteholders for that specific contingency risk without requiring Public Storage to price the entire $900 million offering at a materially higher coupon to compensate for deal-completion uncertainty across the full life of the notes.

Larimar's equity raise carries no equivalent structural protection, because there's no specific external condition (like a pending acquisition) the proceeds are contingent on, the money is simply the company's working capital from the moment it closes, deployed at management's discretion across the existing pipeline.

What this comparison illustrates about reading any capital raise

"Follow-on offering" and "notes offering" are not interchangeable, and the choice of instrument reveals the issuer's cash flow profile, stable, asset-backed cash flow supports debt, binary, pre-revenue value propositions require equity. Pricing convention differs by asset class in ways that carry real information, a bond priced at a discount to face value is being benchmarked against comparable fixed-income yields, equity priced at the last close (with no discount) signals underwriter confidence in demand. Greenshoe/over-allotment exercise is a demand signal in both debt and equity deals, even though the mechanics differ (additional notes at the same coupon vs. additional shares at the same price), full exercise in either asset class means the deal was oversubscribed at the initial terms. Deal-contingent financing (debt raised ahead of a pending M&A close) carries protective redemption mechanics that pure balance-sheet financing doesn't need, always check whether proceeds are earmarked for a specific not-yet-closed transaction, since that changes the risk structure investors are underwriting. And REIT dividend-distribution requirements structurally bias REIT capital raises toward debt over equity for most uses, while pre-revenue biotech's total absence of predictable cash flow structurally biases biotech capital raises toward equity almost by default.