Some of us have had profitable holdings of the VEREIT 6.70% perpetual preferred over the years. It is a monthly payor at a coupon that simply has not been available.
This issue closed at $25.44 today and pays a 14 cent monthly dividend–thus there are about 3 months worth of dividends in the issue right now.
VER has been performing very well as a triple net lease giant and this high yield preferred has been a thorn in their side since they issued it in 2014 and you can be certain a redemption of the final 14.9 million shares will occur this year. You can see all the redemptions of shares over the last couple of years here.
I expect a redemption to be announced in the next 4 weeks (based on their historical redemptions)–the only question is whether they call all the shares at once or continue with the partial redemptions.
I own no shares now–but will buy back in if they do a partial redemption and shares fall back to around $25.
Tim you are spot on. Here is the comment from the CEO on the last CC regarding redeeming the preferred. “WE COULD PAY THEM ANYTIME WE WANT……AND SOMEDAY, TONY, YOU WILL WAKEUP AND THEY WILL BE GONE.”
Only a matter of time before either a partial or full redemption notice is promulgated this year.
CC Reference.
“We don’t Tony. In the $1 billion to $1.3 billion on the balance sheet, those are property acquisitions. So there are no prefs that are in the guidance of being paid. But as you know it started-we started out with $1.1 billion in pref and now we have $373 million. We look at this as an allocation decision and there are differences. You could take out prefs at six, seven which is a high rate and reduced debt from many of our investors who included in debt or you could buy assets and refresh the portfolio, create more walls and create growth. And so we’re going with the latter now. But I will tell you that those are not bad investments. We see it as a free option. We could pay them any time we want. And Mike’s been sneaking them out of the portfolio from $1.1 billion to $3.73 billion. And someday, Tony, you’ll wake up and they’ll be gone.”