Public Storage Calls 2 Preferred Issues

Public Storage (PSA) which had issued a new 4.125% cumulative preferred last week (a $200-$225 million issue) announced a call on 2 older issues late today.

While the new issue provided enough new money to call 1 issue, obviously the company dug into their cash hoard (they had $1.3 billion in cash on 6/30/2020) to call both issues

PSA-W ($500 milion) and PSA-X ($225 million) , both which carry coupons of 5.20%, are being called. The press release is here.

The call will occur on 9/30/2020–a normal dividend payment date.

21 thoughts on “Public Storage Calls 2 Preferred Issues”

  1. PSA-M trading 26.18. Damn, I hadn’t followed preferreds closely lately, but a 4.125% yield trading 26, those are new all time lows for yields. Praying we don’t go full Europe here, certainly looks that way so far.

  2. looking for advice I started following, Tim on his previous site several years back. now have a sizable amount of preffered’s and consider all sock drawer holdings all solidly investment grade, 2 psa’s 2 gabelli’s, and 2 us banks. since my account are with a full service brokerage and trading cost are prohibitive. the question is what is going on with USB-H? have held for a couple years bought some more in March. Up 7 plus % ,Yield now under 4% have that one in my ira others in a roth and taxable account. need to learn from experts

    1. mike – don’t look a gift horse in the mouth. If you look back it traded this high in February before the pandemic and in 2018 it traded up at 24.xx. Nothing fancy here–just that folks want quality plain and simple–and this USB issue is A3 from Moodys–stronger than Bank of America, Citigroup–even JP Morgan.

      If you look at this chart–you will see it has traded in a wide range over the years, but after tumbles it wants to go right back up. This is sock drawer material (as you said)–but is it worth selling and buying back someday? No correct answer as everyone is different. The coupon won’t likely be above 3.5% (the minimum) for many years to come.

      https://innovativeincomeinvestor.com/security/u-s-bancorp-floating-rate-non-cumulative-perpetual-preferred-stock-series-b/

      Whoops–broke my rules–this is off topic and should be in the Sandbox next time.

    2. Perhaps time to lose the full commission broker, at least for holdings that you may want to trade. High trading costs pretty much rule out any kind of trading strategy.

    3. Mike, I have to ask, why use a full commission broker. I guess I can see some rational if they are managing a portion of your assets but sounds like you are making your own decisions on some assets so why not move a portion of your money to an online zero commission broker?

      And as an aside, I understand why sometimes people want others managing their funds for them (I personally could never go this route) but I think there are better ways to do that than with full commission brokers

      1. maverick 61, started that way back in the 1980’s before “online”
        trading. had unit investment trusts, munibonds and closed end funds. never learned to use a computer til 10 years ago after everything had mostly gone away thru maturity or call. Now age 72 and wife can’t even use email right. “get the picture” hand picked a young guy locally to take us to the grave, but make all the investment decisions on our joint/ my wife’s inherited, and my ira/ roth accounts not a good reason for a full commission broker but that’s it. things would have been different if I was 15 years younger. thanks
        “all” for your thoughts.

        1. No problem Mike. You have to do what you are comfortable with.

          But sometimes old dogs can learn new tricks 🙂 If you can post on a message board, you can buy and sell stocks with an online broker. The screens are really intuitive (at least with Fidelity which is what I use) and you don’t need to use all the bells and whistles – you can basically just use the page with your portfolio positions and the trade button to buy or sell. You could save yourself whatever money you pay in commissions since trades are commission free if you look into it. Anyone here would be happy to answer any questions you have. But if it is not your thing, no problem. Do what is best for you. Cheers

          1. maverick61, really appreciate your comments, there’s more to it than what’s been discussed. Wife was trustee of her mothers trust prior to her death. I started a rather complex strategy of converting as much as possible of my ira to a roth from 62 til Rmd age 70 1/2 , lots of tricky conversion moves as things changed value during the years. If any of you folks can ever help I’ll give a holler. thanks to all great website !!!

  3. With preferreds it is a lot easier to tell when to sell than with stocks. In this case, can you find an investment of similar risk that is paying more than 2.5%?

    If I have done the math right in my head that is what you will earn per year until maturity. So to maximize your wealth you will exchange investments whenever you find something yielding more than what you currently hold as long as it is of acceptable quality — tax considerations etc… being equal.

    I am very bad about selling when things are down. I have that personality type where losses hit me much worse than gains lift me. So to counter that I invest in things like the structured notes which I can’t really trade out of until maturity for a portion of my portfolio. That worked really well the last two downturns as it forces you to think long term. I even put money in some with leveraged upside during this downturn which are already up big now.

    Otherwise, my natural inclination is to pull out and then wait too long to get back in. I haven’t done as well as Grid and some others on here, but I have done better than I would have otherwise. So needless to say, I can empathize with your quandary.

    1. This was supposed to be in answer to post below but I got an error when posting and when I tried again it ended up not being nested. Sorry guys!

  4. I own PSA-I which I bought mid-December for $25.32. Thing has been flying lately to the upper $27s maybe partially because of the imminent calls for the older issues. In fact, it’s roughly 2.5 years above par…when to sell?

    1. I was lucky enough to buy PSA-H in an IRA during the March sell-off. A 5.6% coupon with a March 2024 call. Last week the issue was trading at $28.70—that’s 2.6 years of interest with 3.5 years of term remaining. Two questions I ask in this type of situation are can I replace the income if I sell and might I be able to buy back the issue at a considerably lower price over the next year or so? The answers in this case were NO and NO, but I sold anyway! There’s a discipline to selling that I’ve never mastered—usually selling stocks too soon. Someone told me you “never go broke taking a profit.” But I’ve also heard that the “path to riches includes the discipline to avoid acting when emotions say you should!” A silly question—what advice could this community give that enables me and others to break this habit? Sort of “help me before I do something dumb again!” Yazzer, love your question and only wish I had a good answer!

      1. The best advise I’ve received is to sell when you can, not when you have too.
        I also think its important to differentiate between stocks, preferreds and bonds. With stocks, if you have a great company that continues to execute and grow then the upside may be unlimited. With preferreds and bonds you generally have serious upside constraints, so profit taking often makes sense, though redeploying those funds is a constant challenge.
        As Charlie Munger said, “It’s not supposed to be easy. Anyone who finds it easy is stupid.”

        1. sold PSA-I at $27.73 – only had 400 shares but it had 9 quarters of divvy built in at that price – will hold the cash for a while till the next opp comes along…still have a large portfolio of preferreds with others also reaching sky-high levels. If PSA somehow pulled back to the 25s, I would probably reenter.

          1. Well, PSA-I hasn’t reached $27.73 yet (52 week high is $27.65).
            PSA-I was my largest single holding, and I have been selling it little by little for the last couple weeks and rotating into PSA-F. I thought PSA-I had become too pricey, but it seems to keep getting more pricey almost every day. With PSA, you can almost guarantee this stock will get called and be worth $25 come September of 2024 (unless real inflation comes back).

      2. To me, the key thing is to have some sense of the value of what you’re holding as compared to the current price. If that value is higher than the current price, hold. If not, sell. It sounds simple, but it’s anything but easy.
        In deciding whether to hold or sell, I try to avoid looking backward to what I paid, because I think that the decision to hold or sell should be prospective.
        If I hold because I think it is undervalued, that doesn’t mean it won’t become more undervalued. If I sell because I think it is overvalued, that doesn’t mean it won’t become more overvalued. But I can live with that.

        1. agreed – with preferreds however, and their finite life, that becomes even more difficult as to when to take profits IMO. A $25 coupon selling at $27.75, even with 4 years to a call date seems very stretched to me. That was the reason for the question. Got out this morning at $27.73 and will look for other opps. If anything, I have increased my cash position to depoloy in any market pullback!

          1. No disagreement here. For example, comparing PSA-I to GGT-G:
            GGT-G has a higher coupon, higher credit rating, longer to call, and is (at least partially) QDI. Yet GGT-G trades at a lower price. Go figure.
            So, IMO, there are certainly better values than PSA-I out there.

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