Below are press releases from companies with preferred stock and/or baby bonds outstanding-or just news of general interest. News will be slow for the next 4-6 weeks until the 2nd quarter earnings season arrive.
Vornado’s Retail JV Completes $400 Million Refinancing of 640 Fifth Avenue
Ellington Financial Declares Common and Preferred Dividends
RLJ Lodging Trust Sets Dates for Second Quarter 2024 Earnings Release and Conference Call
AIG Completes Deconsolidation of Corebridge Financial
Hi!
What is “IO”?
Thanks.
D.
“INTEREST ONLY” Loan.
+1 for Vornado – “The interest only, non–recourse loan carries a fixed rate of 7.47% and matures in July 2029.”
Non – recourse, nice work if you can get it. Likewise IO. LOL. Wonder which bank they’ll be mailing the keys back to if the rent comes up short – or if one “amended and pretended” to take the loan out of past due status. Next quarterly report, Bank will boast about 100 million coming in and re-fied loan being “mo betta” secured. No mention will be made about giving up the corporate guaranty. Or why they didn’t just cash out in full and collect their 500 million in August.
Disclosure: Re-reading The Big Short, the epic of the subprime era, and seeing bad loans under every rock. JMO. DYODD,
Bear, past month I have been looking on Fido to see what they have to offer in bonds without having to call in. VNO are some I have seen. No interest.
Bear Arent non recourse IO loan pretty common for these buildings? Are they not the standard?
Yes, non recourse IO loans are common. They are what the big PE guys have been returning to the banks. However, what happened here is different – the lender swapped out a larger recourse loan supported by a corporate guaranty for a smaller non-recourse loan.
Good for Vornado, but what was the lender thinking? (We can all speculate. There are plenty of possible reasons. ) Maybe the lender’s explanation will turn up in a footnote. It could offer insights into the NY office RE market in general and Vornado in particular.
On the other hand, the lender could have waited 2 months. collected its 500 million, walked away from an office loan in a market many regard as not yet recovered and reinvested the proceeds elsewhere. (That is, if Vornado had the 500 million. )
Update: that footnote full of juicy lender information may not be forthcoming – vintage 2019 trade reports suggest that the Bank of China was the original lender and part of Vornado’s interest in the property was offloaded to sovereign wealth funds including Qatar. This may be why the news release was silent on the lender’s name,
Wasn’t / isn’t trump involved in VNO? I don’t recall the details, or where I read that, but his association with them seems to stick in my mind.
I wonder at what stage I should take another look at VNO preferred. 8-9% REIT preferred is not exactly bad if they can steer the ship competently. Anyone follow them closely and have an opinion?
fc; for some reason SLG SL Green gets lumped into ‘bad office’ when Marc Halliday has navigated the work from home covid period and rising int rates much better than any other ofc focus REIT.
I have built a 2% holding in SLG Pfd I which pays 6.5% and rounded this out yesterday at $20 for an 8.125% yield; Marc has more clout than VNO’s Roth in REITdom and better connections, shifting the portfolio and selling % to firm up the current period and the best A+ properties in Manhattan including fully leased One Vanderbilt with its ‘Summit’ observation experience.
Anyway I feel much better in SLG pfd than any VNO issues personally.
Philip Eric Jones of Hoya bunch did a piece on ‘avoid’ REITs yest on SA and also included another Bea fave, BF Saul, where I have about 2% in those D and E pfds w low basis. They have some ofc exposure in mixed use properties and are mostly shopping center/grocery anchored. BFS CEO holds over 10mil shares of this REIT and they navigated 2008-9 well as well as pandemic times, lots of apt in their mix too, growing %, which deserves a better cap rate w high leased up % overall in the portfolio and well laddered debt, good % common payout ratios.
Anyway those are where I’d start my due diligence to grab a nice 2-2.5% over cash yields now which is my criteria to add nibbles to my mix. Bea
HBAN guided lower and pulled down most regionals.