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Non-Tech : Income Investing -- Ignore unavailable to you. Want to Upgrade?

To: KEN2CWL who wrote (1153)	6/22/2012 3:38:02 PM
From: brehm233	1 Recommendation Read Replies (1) \| Respond to of 52052

Re: Is everyone ?? I am waiting next week to see if AHL-B comes down to par; coupon is 7.25 and looks safe imho....call in 2017...

To: KEN2CWL who wrote (1153)	6/23/2012 8:58:25 AM
From: Lord Xot	1 Recommendation Respond to of 52052

Re: Is everyone holding RSO-PRA? I've been checking out RSO and came across this discussion in the 1Q CC transcript regarding the possibility of issuing a new pfd which has subsequently occurred. I've speculated that pfds are less espensive capital to these type companies due to the high yields they pay on their common stocks. Management says that buying back common could be one of the uses for the proceeds from the pfds. Also that the proceeds from the pfds could be invested at levels allowing the company to grow the common dividend. Though i may think that 8.5% is big money, it's clear from just this small discussion below, that management thinks that 8.5% is a good opportunity for them. I also think that the advantages in cost of the pfd vs cost of common make these type pfds truly perpetual. I do prefer pfds of amreits over financial reits such as RSO, however...............................................Xot Steve Delaney - JMP Securities Got it. My second question is somewhat capital related too. It seems with this new $150 million line in the current flow, that you are in pretty good shape liquidity wise. In the balance sheet it doesn’t seem that you have any real near comp pressing needs for additional capital, things seemed to be balanced. But we did see some companies come to market in February and March some mortgage [REITs] and take advantage of this historically low rates and issue either straight preferred or unsecured senior notes, and coupons in the range of about 8%, but kind of like Dave Bryant mentioned, treating the trough as capital, I think we view that more as capital than we do as debt. I was just curious whether that type of security might have a roll in your balance sheet and might be appealing to you. Jonathan Cohen Well two things; first, we signed a deal with Wells Fargo. Obviously one of the reasons we are DRIPing is because we plan on expanding our balance sheet and to do $115 million line of credit you probably need $70 million of equity which we had some, but no we’ve put away more so that we can be super aggressive in expanding our commercial real estate finance loan origination effort, which is expanding as we speak. So that’s the first thing. The second thing; I think there is a great position in our balance sheet for a preferred more something like it in the 0.5% (typo?- should be 8.5%-Xot) coupon. Obviously we’ll be very creative even if all we do is buy back our common shares. But we have reasons to believe we could put that money to work and use that to finally grow the dividend. Steve Delaney - JMP Securities Okay, that’s helpful. And I apologize, you are getting an advance rate probably of something like what $0.70, $0.75 on the dollar on your warehouse line and I had in my off-the-top analysis had failed to focus on the fact that you do need capital to draw that line down. Jonathan Cohen Yeah. But we do have the capital, so I want to entrust that we are not looking to do any kind of offering of any kind on the common side. But we have, as I was saying, preferred stock at that rate obviously would be a lot cheaper for common share holders and if we can find the same type of investments we are making, that would be accretive and a very productive thing for us.