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2 Interesting Redemptions Announced

Today we had 2 issues of preferred stock called for redemption. 1 was a mandatory call the other a fixed-to-floating rate preferred.

RiverNorth Capital and Income Fund (RSF) announced that they would redeem the 5.875% term preferred on 10/31/2024–which is their mandatory redemption date. This is one of the most misguided closed end funds that exists–going through 3 names changes and multiple investing goals over the last 7 years. I owned this term preferred since the date of issue in 2017, but had sold it in the last month or two to generate so cash to invest elsewhere. I anticipated that the fund would be selling a new term preferred to generate funds for this redemption but this far nothing has been announced. AFTER this redemption the fund will have assets of around $67 million (using 6/30/2024 financials).

Also today FTAI Aviation (FTAI) announced they would redeem their 8.25% fixed to floating rate preferred (FTAIP). Shares have just become floating with 3 month SOFR plus a fixed spread of 6.886%–no wonder they wanted to call it. FTAI was able to sell a private debt offering this week at 5.875%. The company has 3 other high coupon fixed to floating or fixed rate reset issues outstanding.

10 thoughts on “2 Interesting Redemptions Announced”

  1. Tim,
    Add Centerspace, CSR-C, to the called list. I saw this on Saturday in my Fidelity account. It was one of my largest preferred holdings. The preferred market is starting to look like the old days, with calls being a concern and the hunt for a replacement. I think that Centerspace used to be called Inland Real Estate with a focus on the midwest.

  2. Head’s up for those who hold FTAIO. It begins floating in 2 1/2 months (12/15/2024), when it becomes callable.

    In their April Q1 conference call, their CFO said they plan to redeem both FTAIP and FTAIO before they become callable. I didn’t see any update on this in their Q2 conference call and plans can change. Still, I think FTAIO has call risk.

    Here’s the Q1 conference call Q&A:
    Hillary Cacanando
    Hi. Thank you for taking my question. So this one for Angela. Angela you have two preferreds that go from fixed to floating this year one in September and one in December. Obviously, you’ve had some great returns on those preferred securities. Could you talk about what your plans are for them?

    Angela Nam
    Sure. Hi, Hillary. So, yes, you’re correct in our Series As and Bs are converting to floating later this year. And we’re currently planning on refinancing those preferreds before those reset dates. So we continue to reassess that.

  3. Looks like the accumulated on FTAIP is ~ $0.373945/ sh, so better than the current 25.24 Would be nice to know what SOFR they used.
    Will hold mine.

    1. Gary, thanks for posting that. I will hold mine until then also. Although I have a stink ask out there in case someone gets crazy, lol

      1. Be sure to ck the math on the amt and the # of shares they quote:

        FTAI Aviation Ltd. (NASDAQ: FTAI; “FTAI Aviation” or the “Company”) announced today that it will redeem all of the Company’s outstanding 4,180,000 8.25% Fixed-to-Floating Rate Series A Cumulative Perpetual Redeemable Preferred Shares (the “Series A Shares”) at a redemption price equal to $25.00 per Series A Share in cash, plus approximately $1,579,811 of accumulated and unpaid distributions thereon to, but not including, the redemption date of October 30, 2024 (the “Redemption”). The Series A Shares trade under the ticker symbol “FTAIP.”

        1. Gary – yeah, I too noticed that the math didn’t seem to add up there. Any idea what’s going on with that?

          1. Gary and SNewman,

            My quick take is that the accumulated amount ($1,579,811) looks reasonable.

            About 6 weeks (or 50% of a full quarterly) div will accrue: from the prev div pay date (9/16) to 10/29, the day before the redemption date. ~44 days.

            Estimating ~11.75% floating coupon.
            Quarterly div: $25 par X 11.75% / 4 = ~$0.7344 per share.
            ~ half of $0.7344 = ~$0.3672
            $0.3672 accum div per share X 4.18 mm shs = $1,534,844.

            $1,534,844 is a little less than $1,579,811, so the coupon is a little higher than my guess of 11.75%. That makes sense since I used a pretty recent 3mSOFR as the reference rate and they determined the final partial div’s coupon ~ 2 days before the prev div’s pay date (9/16), when SOFR was higher.

  4. ENLK Series C ($1,000 144A issue) Cusip: 29336UAH0 has been called. Very sorry to see this one go.

  5. I’ve owned both and previously sold both. Got full price for FTAIP recently, should have held on to River North.

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