Category: Ideas

If you hold the 10.625% Wesco Reset preferred (WCC-A) you can claim your gains by selling this issue now. This issue has a reset on 6/22/2025 at a rate which would be in the neighborhood 14-15%. The ‘spread’ on this one is 10.325%. Current yield to maturity is under 2%. The company already has announced plans to call this issue.

The SiriusPoint 8% resettable preferred (SPNT-B) has a year before it will likely be called and is trading at $25.23 right now–so if one could grab it a little lower it would be a nice replacement for the Wesco issue. The yield to maturity (depending on where one can by it) is around 7%

This term preferred (XFLT-A) will give 6.50% for the next year before mandatory redemption in March, 2026.

I hold an overweight position in this issue. It has traded steady as a rock for quite a while as we move closer to the redemption date.

XAI Octagon is a closed end fund.

Not a recommendation, but a notification for consideration.

Banker Heartland Financial (HTLF) has completed its merger with UMB Financial (UMBF).

Heartland had a 7% fixed rate reset preferred outstanding (HTLFP) which has now become UMBFP with the same terms and condition.

This preferred converts to floating rate on 7/15/2025 at the 5 year treasury (now 4.26%) plus a spread of 6.675% meaning at todays rate the coupon would move to almost 11%.

UMB is a $50 billion asset banker and Heartland was about $18 billion—so now we have almost a $70 billion banker.

I am in the process of converting spreadsheets etc to reflect UMB.

This might be a good hiding spot at around 7% for a couple quarters–now trading at $25.25. In fact I just took a small position in the issue.

In the last couple of weeks we have had a couple of fixed-to-floating rate mREITs move into their floating rate periods.

The New York Mortgage Trust 7.875% (NYMTM) issue is now trading with at 3 month SOFR+.2616% plus a spread of 6.429% for a very juicy +10% yield. Additionally Two Harbors Investment has an issue that just went into the floating period with their 7.25% issue (TWO-C) which will float at 3 month SOFR+.2616% plus a spread of 5.011% for a +9% yield.

I hold a few of the mREIT floating rate preferreds–in the current environment they trade very steady and almost always around $25 as they become redeemable at the same time as they become floating which means there is always a call threat.

Watch all of the floating rate issues here.

Actually I did own this term preferred when it had a yield to maturity in the 8% area, but sold it all for $24.98 on 11/24/2024. The issue I am talking about is the Gladstone Lane 5% Term Preferred (LANDM) issue. Currently slated to be redeemed on 1/31/2026 and trading at $24.80–a less than 6% (more or less) yield to maturity is simply too little from a pretty marginal REIT.

Gladstone Land reported earnings for the quarter ending 9/30/2024 that were poor–a net loss of almost $6 million, although funds from operations of around $3 million. While the company is likely safe the reward of the term preferred is simply inferior to many other term preferred that are available.

If I was going to own a term preferred it would be at a current yield of around 7.75% to 8% of which there are a number available which are likely as safe as Gladstone Land. I do understand some of the attraction of the LAND issue–it is easy to understand versus a CLO owner like Eagle Point Credit Company (ECC). Maybe folks want to hold it as a ‘cash equivalent’?