As posted by Z and Maine in comments earlier today mREIT Rithm Capital (RITM) is calling 2 million shares ($50 million) of their 7.50% fixed-to-floating preferred (RITM-A). Their press release is here.
This is a 6.2 million share issue so plenty will remain outstanding–but this is a ‘shot across the bow’ and will ensure the issues trades around $25 plus accrued dividends. The issue fell about 15 cents in trading today–not a big reaction, but only because pricing was reasonable.
I do own a modest position in the RITM-B 7.125% floating issue, which I bought instead of the ‘A’ issue figuring the A issue would be redeemed 1st.
This just a reminder to all of us that if something goes to a $25 plus 2 or 3 dividends and is callable there will be call risk-we can never forget this.
So what’s a partial call? A third of everyone’s holding will be redeemed, basically? Or is it selective?
I admire people who come here and are willing to ask such a basic question.. It reminds me we have all levels of expertise here and an environment that encourages sharing info and experience…… YES, you’ve got it correct…. It’s normally done mathematically so subject to slight variations shareholder to shareholder, but yes each one will have approx 31% of what they own called…. but keep in mind this call has to do with RITM, not RPT.
Yes, I own a decent amount of the RITM-B in my taxable account since the divvy is qualified. Will hang with it since, if more called by RITM, once would think it would affect the balance of the -As…
I thought as a mortgage REIT that RITM-B dividends would be taxed as ordinary income?
Not quailified but you often get Section 199A dividends which are 20% taxfree. I have most of mine in IRAs it’s still a high dividend and I make trades. Also note that if you have a large amount of Qualified Divs elsewhere it can reduce your writeoff of Section 199a.
Thanks, Martin.