Lodging REIT Sotherly Hotels (SOHO) has announced the reinstatement of dividends on their preferred stock issues (3 issues).
It would appear that while the current dividends will be paid dividend which are accrued (cumulative) will be paid out from ‘time to time’.
The company press release is here.
I find it interesting that no preferred holders were added to the board after missing 6 qtrly payments. It confirms my suspicion these statements are meaningless. Two board members can’t dictate the board anyway and I would not be surprised if the corporation simply adds more board members to dilute the two anyway.
Retail investors have no recourse as a practical matter when companies do not do as they state with respect to preferred securities. (Exceptions exist but they are few.)
Are my thoughts valid?
They HAD to do this. All the cumulative shares have this…
https://www.sec.gov/Archives/edgar/data/1301236/000119312517300285/d459857d424b5.htm
“If distributions on the Series C Preferred Stock are in arrears for six or more quarterly periods, whether or not consecutive, holders of shares of the Series C Preferred Stock (voting together as a single class with holders of our Series B Preferred Stock and all other classes or series of Parity Stock upon which like voting rights have been conferred and are exercisable) will be entitled to vote at a special meeting or at our next annual meeting of stockholders and each subsequent annual meeting of stockholders, for the election of two additional directors to serve on our board of directors (which we refer to as a preferred stock director), until all unpaid distributions and the distribution for the then current period with respect to the Series C Preferred Stock and any other class or series of Parity Stock have been fully paid or declared and a sum sufficient for the payment thereof set aside for payment. In such a case, the number of directors serving on the board of directors will be increased by two members. ”
I am guessing they just hit the 6 quarterly period limit….
According to Marketwatch, the last ex-div date was in December 2019. That implies that SOHO has missed 12 quarterly payments.
Oh boy.. So were the Preferred directors elected at the 2022 annual meeting?
They are currently 12 quarters behind.
Well, hooray, finally! Curious that they can delay payment of older/accrued dividends, but start paying current ones. I guess I’ll just hang on to my 1/2 position for a while…
They do this to avoid the new Directors being elected to represent preferred shareholders covenant. Pay the current and maintain going forward. The accrued part can be paid over time.
Are you sure they are paying the current dividends?
“….authorized payment of quarterly cash dividends for the Company’s Series B, Series C, and Series D Preferred Stock that were previously declared on January 27, 2020.”
They appear to be paying the dividend that was initially scheduled to be paid on 4/15/2020.
> Are you sure they are paying the current dividends?
Not yet, but they will be…
From the press release:
> “We are pleased to announce the reinstatement of quarterly preferred dividend payments, which was facilitated by the continued recovery of the Company’s operating fundamentals,”
Until they start making more than 4 payments a year or start doubling up on quarterly payments, they will never catch up.
“In the future, we intend to reduce the amount of accrued preferred dividends through the periodic announcement of special dividends, as warranted by market conditions and the Company’s profitability.”
I think they’re structuring it this way so not everyone will head for the exit at once.
So… if I buy now, I get those special divs- even tho I never held them?? Seems unfair. Or else they know who got stiffed in the past.
If you buy, the person selling them is giving up the rights to those dividends. What is unfair?
Agreed, but not sure if that’s the plan ( special for anyone).