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Strategies & Market Trends : Value Investing
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To: MCsweet who wrote (33706)3/3/2009 12:05:41 PM
From: Grommit  Read Replies (1) of 78730
 
"At the same time, preferreds of financials (while super cheap) scare me." I agree. WFC pref yields 14% or 15%, but their balance sheet still might have risk. Why try to guess the value of the mortgages on the books. I guess you could just follow WB and assume he did his homework.

However many reit prefs are paying more, and the assets are probably less risky. The stocks are less known and unfollowed. Very low volumes so their pricing is more likely to be out-of-whack.

Example:
FR just came out with earnings. I do not own the common due to their debt/eq higher than my limit. But I do own FR-K. FR-K div is $1.81 & stock price is $7.25 = 25%. What am I missing?

finance.yahoo.com

My take aways:
1. They are profitable, and expect to earn $1.34 in 2009.
2. The debt maturities seem to be handled.
3. They are paying pref dividends.
4. Common dividends will be limited to the legal requirement.
5. They have pay the common eventually, and to pay the common, they have to keep paying the preferred.
6. They will sell assets over time to reduce the debt level.
7. Let me repeat number 1, they are making money, even with worst case vacancy assumptions.

The First Industrial team delivered solid portfolio results in 2008, maintaining strong tenant retention and in-service occupancy levels throughout the year... "With less than $150 million due through the end of 2010, we have a manageable debt maturity schedule...
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