Wednesday, March 5, 2014

Equity REIT Common and Preferred Stock Table as of 3/5/14

To illustrate what I call dynamic asset allocation, I compiled information and links relating to my recent movement into equity REIT common and preferred shares. 

Dynamic asset allocation is tied directly to the conditions in the market and other external events, unrelated to my age or other personal matters. Stocks, Bonds & Politics: Static v. Dynamic Asset Allocation (12/11/2008 Post). The Vix Asset Allocation Model is just one example of dynamic asset allocation. Vix Asset Allocation Model Explained SimplyExamples of Dynamic Asset Allocation over the Past Two Years (June 2009 Post). 

The entire analysis involving long term secular bull and bear markets is another, as well as the evaluation of the underlying causes of asset correlations. (e.g. The Roller Coaster Ride of the Long Term Secular Bear Market; Instability & Volatility in Asset CorrelationsThe Importance of Identifying the Underlying Causes of Long Term Bull and Bear Markets; The Big Picture Questions)

Basically, I attempt to take whatever opportunities are given to me by the market, taking into account my conservative and cautious nature (most of the time!) and my focus on income generation.  

None of the securities shown in the following table, except for 150 of BDN valued at about $2,250 now, were owned as of 9/1/13. After REIT equity preferred and common shares corrected in price between May and September, I went from a small position in BDN to almost $60,000 in equity REIT common and preferred shares.

I took this snapshot during the trading day on 3/5/14, when the DJIA and S & P 500 were slightly in negative territory: 

Click to Enlarge 

After publishing this table today, I was able to buy 30 EPR at $53.3 later during the 3/5 trading day, basically using the same approach as I recently explained for DLR. I will discuss that trade in the 3/17 weekly post along with the 50 EPRPRF included in the preceding snapshot which was bought at $22.5.

Links To Trades and Snapshots: The following is yet another example of what I call "turtle" investing. I do not go anywhere very fast, and risk is dispersed into a relatively large basket of securities. Between May and September 2013, I owned only 150 BDN shares purchased in the open market (plus shares purchased with dividends), having added 50 shares in November 2012. BOUGHT 50 BDN at $11.7 (11/2/2012 Post) 

Bought: 100 OHI at $29.85 (12/23/14 Post)

All of the Canadian REITs mentioned above pay monthly distributions and were bought on the Toronto exchange using my CAD stash. 

I have not yet discussed some of the securities included in the preceding table and will do so in the coming weeks, including two new Canadian REIT adds. 

I have already started to pare some of the positions and have sold some positions that are no longer reflected in the preceding table. It remains to be seen whether this asset allocation sector shift will be beneficial, but I do have gains in most of these recently purchased securities with the 100 share of Realty Income having the largest current unrealized gain (almost +$750) 


  1. Hi Southgent,

    Re. "... It remains to be seen whether this asset allocation sector shift will be beneficial ..." I am curious about the appropriate benchmark for this comparison. If you use spare cash for this shift, you will be ahead as long as you have gains because of ZIRP. However, you could have bought SPY instead. In that case, I believe that the benchmark should be S&P500. A side question is why you made this shift, in lieu of investing in the broad market (S&P) or a particular sector. The answer to this question could change the benchmark.

    Just my two cents.


  2. Peter:

    I would measure the overall results on a total return basis compared to a broad based index fund like SPY or IYY. It will be impossible for me to make a precise comparison since I do not have a constant monetary exposure in the sector shift. I have already tossed some like DRE and bought others since that table was published earlier this week.

    Even though my list includes REIT preferred stocks, I would also compare the results with the low cost Vanguard REIT ETF VNQ which fell 1.08% today. My portfolio was down .63%.

    With the rise in interest rates today, REITs declined in price, particularly Realty Income and DLR. However, I would measure the comparative return over the life of the shift which may last for months or years.

    I will discuss why I did not sell Realty Income in my personal account in Monday's blog. You can read the reasoning in my last comment to a SeekingAlpha article.

    Today's Action:
    SPY Up .04%
    My Equity REIT and Preferred Stock Portfolio: Down .63%. Some of the preferred stocks rose in price which cushioned the decline from DLR at -3.57%; O -2.71%; IRC -3.25%, BDN -2.

    Regional banks are a portfolio counterweight to the REITs, in that investors are selling REITs with every whiff of an interest rate rise and buying regional banks who they believe will benefit due to an expansion of their net interest margins.

    My regional bank basket was up .83% today or +$357.79. If I only owned REITs and regional banks, which is not the case of course, the split would be about 60/40 with REITs being the 60%. On a net basis, I was down about $30 when combining those two portfolios with the 40% allocated to regional banks basically offsetting the weakness in REITs. The net result was in line with the market averages. So I would also look at this weighting and combination.

  3. Hi Southgent,

    I don't see TCBIP in the table. Do you still own TCBIP that you purchased in Oct 2013?


  4. TCBIP is not a REIT preferred stock. It was issued by a bank holding company and would consequently not be listed in this table.

    It was listed in the exchange trade bond and preferred stock table published in February:

    Without checking, I believe that I still own it. I did sell the subordinated bond from the same issuer TCBIL which is referenced in that post.

    Now that you have reminded me, I see that the current price of $23.75 produces a current yield of 6.83%, and this is an equity preferred stock. So I will take a look before the market closes today.

  5. PETER: I can confirm that I still own 50 TCBIP. I elected to keep it for now since I could not find a suitable paired trade for it, where I would increase my income generation. The yield is close to 7%. I may change my mind on that one at anytime. Those shares closed today at $23.89 which would be around a 6.8% yield. The shares went ex dividend for the quarterly distribution on 2/27/14.

    On 3/26, TLT rose .78% and LQD ended the day up $.45. Possibly, better bond and bond like security prices will develop near term, particularly if stocks continue to sell off.