I bought a 1/2 position of the lodging REIT preferred of Pebblebrook Hotels (PEB) this morning.
The company has a total of 5 issues currently outstanding which can be seen here. The most recent issue, which was sold on 5/6/2021, was 8 million shares with a coupon of 6.375%. This issuance has lead investors to believe that a redemption of an older issue may occur–maybe and maybe not–actually I doubt it. The highest coupon outstanding is 6.50% which would make a call somewhat unusual–certainly could happen though. The company has stated they will use 50% of the proceeds from the newest issuance to pay down credit lines–leaving enough cash to call maybe 1 outstanding issue if desired.
I bought the PEB-F with a 6.30% coupon which happens to come redeemable today–simply assuming if there was to be a call it would be the 6.50% PEB-C issue.
Regardless–I have added 4 preferred issue of PEB to the watch list.
Pebblebrook is one of the strongest lodging REITs out there and while their revenues were decimated during the pandemic I expect them to come roaring back in the quarter ahead.
I bought the newly issued series G @25.25, about 10 days ago, wanting the longer call protection.
It’s already shot up in price about a dollar; I don’ t know what to make of that, but I wouldn’t buy it at the current price.
It does seem like a lot of the newer preferreds are offering a yield higher than the market might demand at their IPO, and shoot up in price quickly.
Wouldn’t rlj-a be the better choice if you are comparing apples to apples? Even at 28 rlj-a pays more.
Hi Fc—I have owned that one off and on over the years–but not currently. I need to review the current balance sheet, but yes it has been a good one.
I have PEB-C and PEB-D. purchased both way below par when the hotels were beaten down. Bought a little INN-E at the same time. I think they will be survivors.
Good job C Malcolm!!
Tim,
what are your thoughts on SOHO bonds? they are cumulative, and SOHOB is trading around $17, might be good for some capital gains here when they reinstate the dividend. Last CC, CEO said they are maybe 2-3 quarters away.
They are working off their forbearance and short term bills first, then the prefers bonds should be next.
-james
Hi James–I need to review their balance sheet. I have shied away because they are so so small (8 properties or so I think?). On the other hand I am super conservative–so for others maybe the risk/reward is something to consider.
I thought SOHO couldn’t give a timeline on div during the conference call due to the other senior debt terms after the forebearance but maybe I didn’t listen close enough. The senior terms were crazy good for the lender like a 1.5 multiple no matter how quick it was paid back plus interest which made me nervous that there wasn’t really a great reason to pay it back any quicker, and I’m usually the first guy to look in the garbage pile for deals.
I had been considering selling my smallish SOHOB, as it has very nice gains from when I took a risk in getting a handful of it last year. However, the chance at cumulative dividends being paid sometime in the reasonably near future has me rethinking. At $21.45 right now, it still has some room to run (it was around $26 pre-covid), and then what, 5 or 6 or 7 quarters of suspended dividends to snag? Maybe I need more patience to get the full bounty…