This past week I added about a 1/2 position in the perpetual preferred issue from REIT Gladstone Land (LAND).
Gladstone Land 6% perpetual preferred (LANDO) differs from almost all other income issues that the various Gladstone companies have sold in the past in that it is a pure perpetual. Typically they have sold either ‘term’ preferreds (preferred with firm redemption dates) or they have sold short maturity baby bonds. To date only Gladstone Commercial (GOOD), another REIT, has used perpetual preferreds.
This issue was originally sold starting in 1/2018 by Gladstone Land in an continuous untraded offering, which was completed in 10/2020 at which time the shares were listed for exchange trading.
Now trading at $24.82 the issue provides up a current yield of just over 6%.
Net income of Gladstone Land is not impressive, but being a REIT we can focus on funds from operations (FFO) which is relatively solid.
We had held the term preferred LANDP which carries a 6.375% coupon but has a mandatory redemption date on 9/30/2021 which gives it a current yield of 6.06%–but a terrible yield to worst of around -5%. Trading at $26.30 right now, even if held to maturity, an investor can only look forward to earning 30 cents in the next 9.5 months. We have sold all of our LANDP.
Lastly we always like the monthly dividend payments that Gladstone companies tend to pay–I always say–“better in my pocket than their pocket”