If These Issues Were Good 2 Weeks Ago They are Great Now

While I am not a holder of any REIT preferred issues that are retail focused those with a bit more risk tolerance may want to consider these issues.

The 2 issues are from retail focused REIT Saul Centers (BFS). These 2 issues, the 6.125% perpetual preferred (BFS-D) and the 6% perpetual preferred (BFS-E) have call protection out until 2023 and 2024 respectively.

kaptain lou had written about the 6% issue on Seeking Alpha a couple weeks ago and the E issue was trading at $24.35–yesterday it took a tumble to as low as $22/share–bouncing back today to $22.75.

BFS is one of the stronger retail REITs, but there again if you are totally negative on the sector these are not for you–but some due diligence by an investor may prove to them that at these prices there are bargains to be had if bought now.

21 thoughts on “If These Issues Were Good 2 Weeks Ago They are Great Now”

  1. I tried looking for Kaptain Lou’s article on Seeking Alpha but couldn’t find it. Would you be able to link it Tim?

  2. Losing a years worth of coupon in a couple of days is not my idea of a stable preferred investment. Has the market given an all clear signal or is there more volatility to come? Would much rather sit for the next six months in a low risk baby bond like RCP than gamble on commercial real estate at this juncture.

    1. Well said Citadel! Instead of “Early Retirement Advisor”, it should be “You’re Going To Need a Part-Time Job Advisor.” Some may be interested to know that none of the illiquid utilities I own have fallen 7% in the last couple weeks. Most didn’t fall 7% in the worst of the market drop in March either.

      1. Hi Dick–kaptain lou has been valued on this board and SA for quite a long time–and is welcome to post here, but not berate others. I think he has the right idea here (the BFS preferreds), but the markets are working in strange ways and likely these will be good longer term holdings (if you assume a recovery in retail).

    2. Citadel,
      My IPLDP is holding up and I am still above water (barely ) with TDJ, SCE-PH, and NYCB-U and a little under with SCE-PL that I bought in the last couple months. But considering how far the rest of the market has fallen I think at least treading water is fine.
      Waiting on a couple bids to hit on some Term preferred issues to replace the CTZ that was called. My commons are another story, but I bought them for the dividend and future growth.

      1. I agree…term preferred and/or baby bonds (close to or past call) provide less risk in this uncertain market. You might even want to simply hold cash from the CTZ redemption for a while…at least until the smoke clears from the Presidential election. My guess is there will be better entry points for a lot of equities then we’re currently seeing.

  3. A little research on this hitherto unknown (to me) REIT reveals that they are mainly involved in discount department stores, drug stores and grocery stores. Maybe worth a look.

    Assume they’re not investment rated?

      1. I agree Tim – I have a couple different tranches of BFS-E, initially from 2019 and another at a huge discount during this spring’s crash. I added another 100 shares a bit earlier today after you pointed out the pricing weakness. I do like their customer focus and the common BFS is still paying a nice dividend

    1. Don’t they have a bunch of hotels? Not a good market to be in these days. Their strip shopping centers and apartments are in upscale suburbs of D.C.

      1. From their last quarterly update – no mention of hotels (so if they even have any, they would be a very small part of their business)

        COVID-19 Update (as of September 16, 2020)

        Our portfolio is comprised of 50 shopping centers and seven mixed-use properties, totaling approximately 9.0 million square feet of retail and office gross leasable area (GLA). In addition, our portfolio contains three residential properties, comprising 1,006 luxury apartment units, or approximately 0.9 million square feet.
        Of our 50 shopping centers, 43 are anchored by a grocery store, home improvement store, pharmacy or bank, all of which have remained open during the pandemic due to their “essential business” designations.
        98% of our tenants are currently open and operating under modified operating protocols in accordance with state and local guidelines.
        100% of our shopping centers are open.

        Collections Update

        The following is a summary, as of September 16, 2020, of our consolidated collections of rent billings, including minimum rent, operating expense recoveries, and real estate tax recoveries for the quarter ended June 30, 2020 (“Second Quarter”), July 2020 and August 2020:

        Second Quarter 2020

        81% of Second Quarter 2020 total billings have been paid by our tenants.
        76% from retail
        94% from office
        100% from residential

    2. Ron- Spent a lot of time going through all the grocery anchored shopping center reits in the past month. Didn’t buy Saul common because liked REG, ROIC and UBA better for the common but felt very comfortable adding SAUL preferred issues 2 weeks ago (didn’t see action today but would have added if I did). They own mostly grocery anchored shopping centers in the Maryland area, but have some large mixed use projects in the pipeline at different stages. Don’t worry about the day to day price fluctuations if you can buy it right and put it away.

  4. Thanks Tim. I sold my BFS-E on 10/2/2020 @ 24.75 after collecting dividends for a year. Bought a small position back yesterday at 22.75. Been nibbling at UBP-H. Not holding a lot of either, but comfortable with a small position at these levels.

      1. I just picked up 250 shs to start, paid 22.465 even though my limit was 22.48.
        I’m game…let’s see what happens

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