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Pennsylvania REIT: This Preferred Looks Attractive


We continue to assign Pennsylvania Real Estate Investment Trust a BUY rating and recommend that investors who are hesitant to invest in the mall or retail sector equities consider the PREIT Series B preferred stock. Rubicon contributed to this article and ...


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Sign in / Join NowGO»Market NewsStock IdeasDividendsMarket OutlookInvesting StrategyETFs & FundsEarningsPROREITsDividend IdeasDividend StrategyDividend NewsDividend Quick PicksEditor's Picks(function(w, d) { var getParam = function (name) { name = name.replace(/[\[]/, "\\[").replace(/[\]]/, "\\]"); var regex = new RegExp("[\\?&]" + name + "=([^&#]*)"), results = regex.exec(window.location.search); return results === null ? "" : decodeURIComponent(results[1].replace(/\+/g, " ")); }; var rc = function(n) { var c = document.cookie.match(new RegExp('(^|;)\\s*' + escape(n) + '=([^;\\s]*)')); return (c ? unescape(c[2]) : null); }; var pLimit = 2, pages = 3, log = rc('user_id'), p = parseInt(getParam('page'), 10) || 1, page = (p Pennsylvania REIT: This Preferred Looks AttractiveMay4.17 | About: Pennsylvania Real (PEI) Brad Thomas Dividend growth investing, REITs, newsletter provider, valuePremiumREIT BeatSummaryLet me be the first to admit that it hasn't been an easy road with PREIT. The risk profile of the equity may not be for all investors. Consider the PREIT Series B preferred stock. Around three months ago, I published a note on Pennsylvania REIT (PEI) in which I stated: We believe that PREIT is poised to profit, shares are now trading at a substantial discount and we don't believe that the market is providing the company with the attention it deservesGiven our argument that the higher quality Malls will perform best, we are initiating a BUY on shares at the current price of $16.93 (dividend yield of 5.0%)We are also adding shares to the Durable Income PortfolioLet me be the first to admit that it hasn't been an easy road with PREIT Recognizing the under-performance of ALL Mall REITs lately, we believe that investors should consider focusing on the higher quality Mall REITsWe like Simon Property Group (SPG) and Tanger Factory Outlets (SKT) – both battle-tested REITs that are best prepared to manage retail riskGiven the more recent pullback, we think it’s prudent to be more cautiousLet’s dig deeper… On April 25th, PREIT reported first quarter earnings, highlights from the release were: New leases executed for 725,000 square feet of space with future opening dates, Portfolio sales grew to $465 per square foot, Same Store NOI was flat compared to prior year, Sales per square foot reached $465, FFO for the year ending December 31, 2017 is expected be between $1.64 and $1.74 per diluted share (which maintains a sub-50% payout ratio) Despite the flat NOI, we were reassured about the REIT's trajectory and their ability to replace their struggling anchor tenantsReassured yes, but we realize that there are many miles to go before we sleep (well) (Our sincere apologies to Robert Frost)Due to this, we realize that the risk profile of the equity may not be for all investorsThere is, however, a more stable way to invest in PREIT – the preferred stock. The following is the outstanding preferred stock of PREIT: The pricing of the preferred is as follows: The Series C was issued to redeem the Series A, but we included the Series A as it is still outstandingOf the outstanding preferred, we are leaning towards the Series B due to the higher stripped yieldThe probability of the Series B being called is low, in our opinion, as the rate is not significantly above the new issue and therefore it is highly unlikely that PREIT will be able to refinance the preferred cheaper Graphically, the stripped price and yields of the peer group are: As the table and charts above show, PREIT preferreds are among the higher yielding preferred stock of the peer groupIn fact, PREIT's preferreds have near the same yield as CBL & Associates (CBL) despite the quality differentialWe continue to assign Pennsylvania Real Estate Investment Trust a BUY rating and recommend that investors who are hesitant to invest in the mall or retail sector equities consider the PREIT Series B preferred stockRubicon contributed to this article and he is also the Senior REIT Analyst for the Preferred REIT Portfolio (in the Forbes Real Estate Investor)To get a first look at my upcoming article – The Evolution of My Durable Income Portfolio – CLICK HEREI also include all of my Rhino REIT Ratings in my marketplace product, REIT BeatAuthor Note: Brad Thomas is a Wall Street writer, and that means he is not always right with his predictions or recommendationsThat also applies to his grammarPlease excuse any typos, and be assured that he will do his best to correct any errors, if they are overlookedFinally, this article is free, and the sole purpose for writing it is to assist with research, while also providing a forum for second-level thinkingIf you have not followed him, please take five seconds and click his name above (top of the page). Disclosure: I am/we are long APTS, ARI, BXMT, CCI, CCP, CHCT, CLDT, CONE, CORR, CUBE, DLR, DOC, EXR, FPI, GMRE, GPT, HASI, HTA, KIM, LADR, LTC, LXP, O, OHI, PEB, PK, QTS, ROIC, SKT, SNR, SPG, STAG, TCO, WPC, I wrote this article myself, and it expresses my own opinionsI am not receiving compensation for it (other than from Seeking Alpha)I have no business relationship with any company whose stock is mentioned in this article.About this article:ExpandAuthor payment: $35 + $0.01/page viewAuthors of PRO articles receive a minimum guaranteed payment of $150-500Become a contributor »Tagged: Dividends & Income, REITs, Financial, REIT - Retail, Alternative InvestingProblem with this article? Please tell usDisagree with this article? Submit your own.Follow Brad Thomas and get email alerts.st0{stroke:#FFFFFF;stroke-width:2;stroke-miterlimit:10;} .st1{fill:#FFFFFF;} .st2{clip-path:url(#XMLID_2_);} .st3{fill:url(#XMLID_3_);} .st4{fill:url(#XMLID_4_);} .st5{fill:url(#XMLID_5_);} .st6{fill:url(#XMLID_6_);} .st7{fill:#FFFFFF;fill-opacity:0.2;} .st8{fill:#3E2723;fill-opacity:0.1;} .st9{fill:url(#XMLID_7_);} .st10{fill:none;}Top Authors|RSS Feeds|Sitemap|About Us|Contact UsTerms of Use|Privacy|Xignite quote data|

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