- The first REIT preferred issue has been priced and we find pricing appropriate.
- The new issue is quality yield, but there is higher yield.
- Our thoughts on the issue and its peers.
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The first REIT preferred deal of 2018 has priced, and it is continuing the trend of what we saw last year – issuing a new preferred at an attractive price in order to redeem an existing series of preferred shares.
As we expect this trend to continue in the near term, we can’t caution investors enough to pay attention to the call date and the yield-to-call. If you are going to buy a preferred with a short time until the call, make sure to look at the dividend rate, where shares are trading and decide if you believe there is a high risk of early redemption. If there is, make sure that the yield-to-call is palatable and meets your portfolio objectives or move on to the next candidate.