Vornado Realty Trust (VNO) has announced a new preferred stock offering. Honestly I have been waiting for this one for a long time.
VNO has 4 preferreds outstanding including 2 that have been redeemable for 3-4 years and it was just a matter of time before they did a ‘refi’ on them. The VNO-K 5.70% issue has been redeemable since 07/2017–not sure why an investment grade REIT waited this long. The VNO-K issue is off a dollar this morning. This issue should be split investment grade–BB+ from S&P and Baa3 from Moody’s.
The preliminary prospectus can be read here.
J was on top of this one with If you Prefer chiming in.
Full redemption of series K.
4.45 on 12 shares. No surprises there!
12 mill….300mm shares….
Seeing VNO pr N is at 27 1/2 w a 3 ytc or so. 4 1/2 not bad
IYP, Gotta ask, did you trade at some point in fractions? Maybe a broker?
That was an interesting contrivance of coinage. I am remembering pulling down 1/8th pricing…12.5 cents. Now we are flipping for that.
Ha, I remember as a bond trader hiring a true broker when the broker charged an 1/8 for his services… Yup and 1/8 was the lowest used figure……. I also remember having to calculate bond yields by extrapolating from a book of pre-figured yields….. and getting Moody’s information on munis from 2 GIGANTIC blue books with tiny print on very thin paper. Thousands of pages, with each volume being 5-6″ thick I bet! Yikes. No they weren’t written in hieroglyphics…
I suspect what Tim means is that he has been EXPECTING (“waiting”) a refunding issue for a long time, given the money VNO could have saved in dividend payments at the lower refunding rate.
Chris
Correct Robert–these have been great holdings over the years–but not the last while at ridiculously high prices.
Tim,
Why are you excited about a new Vornado Realty issue? Super excited to buy into a new preferred with a super low yield?
Office REIT + super low yield doesn’t equal exciting to me.
I am not Tim and would value his explanation for sure. But, here is my reason why I would be looking to buy it when issued.
I see that their 5.25% coupon VNO-N callable in 2025 is trading $27.4x and the 5.25% coupon VNM-M callable Dec 2022 is in $26s.
So if you can snag this new one near $25, it will likely be a good flip candidate to get $0.5-$1 gains in a few weeks…
mSquare – Curious what issued yield you are basing this flip on?
My post above that it would make a good flip is more to do with what price you are able to buy it rather than issued yield.
Say coupon is 4.5-4.75% (recent mega banks issued at or above 4.2%) and you buy it at $25.10 then I think it could trade in high $25s pretty soon, maybe even $26s
How much of a discount on that yield do you take into account comparing it to a qualified div from a bank? I am just wondering if there is some known amount to knock it down to make it more of an apples to apples comparison?
Thanks for the response, usually buy these to hold, but since they are now yielding so low I don’t consider them safe to hold long term. Guess I’ll have to try your method.
All four VNO have been very good for investors. And 4 5/8 initial price talj
Thats why I’m excited. But deal looks small….