REITS - Buying 1 - 2 weeks before going ex-dividend Message Board

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Strategies & Market Trends : REITS - Buying 1 - 2 weeks before going ex-dividend

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To: Paxb2u who wrote (2256)	2/14/2002 10:11:40 AM
From: Richard Barron	Read Replies (1) of 2561

Peter, Originally with Walden and actually with G&L Realty, the common stock was bought out, but the preferred stock was essentially left in place, instead of being bought out also. The G&L preferred stock is still public and dividends are being paid by the new owners. If these owners leverage up and borrow from a bank (or whoever) 80-90% of the value of the properties, and then real estate values drop, the bank could collect the full value of the property before the preferreds get a penny. Most people feel preferreds are more secure than common, since the common dividend has to go to 0.00 before they can cut one cent from the preferred dividend, and if the company is forced to liquidate, the preferreds are ahead of the common shareholders. The issue is during a buyout, additional debt doesn't require public scrutiny, just the current owners, who could benefit from taking out the cash value if the bought it cheaper than the cash they take out. Richard

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