Economy:
A number of factors are coalescing that make a recession more likely IMO. Real GDP growth may slip close to zero in the 4th quarter or possibly into slightly negative territory.
In addition to higher interest rates crimping demand, particularly for new homes and non-essential consumer products, those factors include the ongoing UAW auto strike, the prospect of a government shutdown, and the resumption of student loan payments in October. COVID-19 Emergency Relief and Federal Student Aid | Federal Student Aid; Government shutdown, strikes, student loan payments test economy’s resilience - The Washington Post
The current portfolio management plan is to wait for a recession before materially increasing my stock allocation. Depending on the severity, and the FED's reaction (e.g. lowering the FF range), proceeds from some maturing treasury bills may be redeployed back into stocks.
At some point during a stock market correction, my first reaction will be to quit selling stocks and to start using all dividend and interest cash flow to buy more dividend paying stocks, particularly in hard hit bond like stock sectors.
Personal Income and Outlays, August 2023 | U.S. Bureau of Economic Analysis (BEA)
Annual Core PCE Inflation: 3.9%, month-to-month increase only .1%. The annual increase through July was 4.3%.
Discussed at PCE inflation August 2023: Good news for inflation hawks
In the third estimate for 2nd quarter GDP, the government estimated that real GDP increased at an annual rate of 2.1% which was unchanged from the second estimate. Gross Domestic Product (Third Estimate), Corporate Profits (Revised Estimate), Second Quarter 2023 and Comprehensive Update | U.S. Bureau of Economic Analysis (BEA)
Mortgage demand shrinks as interest rates hit nearly 23-year high
Pending Home Sales Tumbled 7.1% in August
September Nominal Treasury Yield Curve: The rise in intermediate and long term rates is troublesome. During the month, the 10 year treasury yield went from 4.18% to 4.59%.
10 year TIP breakeven inflation rate as of 9/29/23: 2.35%, up from 2.26% as of 9/1/23.
September 2023 Real Yields:
++++
Allocation Shifts Discussed in this Post:
Treasury Bills Purchased at Auction: $9,000 in principal amount
Treasury Note Purchased at Auction: $1,000 in principal amount
Corporate Bonds: $4,000 in principal amount
CD: $1,000 (monthly interest)
Common Stocks: +$370.9
(consisting of $1,565.44 in purchases minus $1,194.54 in proceeds minus)
Stock Funds: -$769.99
Net Outflow Stocks/Stock Funds: = -$399.09
Realized Gains Common Stocks/Stock Funds: +$579.7
U.S. Equity Preferred Stocks: +$611.95 (weighted yield at 9.41%)
2023 Net Outflow Common Stocks/Stock Funds: -$40,055.43
+++
Trump and His Party:
In a recent ABC-Washington Post poll, Trump is leading Biden by 9%:
RealClearPolitics - Election 2024 - 2024 Republican Presidential Nomination
Trump and company liable for fraud in New York lawsuit, judge rules; New York judge finds Donald Trump liable for fraud; N.Y. judge finds Trump committed fraud and sanctions his attorneys - The Washington Post
Decade in the Red: Trump Tax Figures Show Over $1 Billion in Business Losses - The New York Times (5/8/19)( In 1985 "Trump reported losses of $46.1 million from his core businesses — largely casinos, hotels and retail space in apartment buildings. They continued to lose money every year, totaling $1.17 billion in losses for the decade. . . In fact, year after year, Mr. Trump appears to have lost more money than nearly any other individual American taxpayer") Yet in 1987 he published the "Art of the Deal", a self promotion book extolling his brilliance as a business person. Just a shameless con which still works on republicans even when the easily available facts undermine his reality creations. Trump was successful in inheriting money from his father and in creating a false brand image that he successfully licensed to others that took the business risks or to generate huge sums in a "reality" TV program. How Trump has made millions by selling his name - Washington Post; Donald Trump's Real Secret To Riches: Create A Brand And License It
Trump’s Taxes: Red Flags, Big Losses and a Windfall From His Father - The New York Times (12/21/22)
GOP Rep. Paul Gosar calls for General Milley to be 'hung' in echo of Trump's 'death penalty' comment - Raw Story Gosar: "in a better society, quislings like the strange sodomy-promoting General Milley would be hung."
Milley is the now retired Chairman of the Joint Chiefs of Staff who was appointed to that position by Donald.
Don the Authoritarian claimed on 9/22 that General Milley was guilty of treason and deserved to be executed. 'Punishment Would Have Been DEATH!' Trump Accuses Mark Milley of Treason; Trump Suggests That Mark Milley Deserves Execution - The Atlantic
General Milley has voiced some criticisms of Deeply Disturbed Don which explains why the viper spewed his venom.
Maybe Donald, when he is reelected, will resume this old English tradition. King Henry VIII used to stick his enemies' heads on spikes- Lining London Bridge
Trump: “I say up front, openly, and proudly, that when I WIN the Presidency of the United States, they and others of the LameStream Media will be thoroughly scrutinized for their knowingly dishonest and corrupt coverage of people, things, and events,” he posted. “The Fake News Media should pay a big price for what they have done to our once great Country!” Don the Authoritarian also said the media needs to be investigated for its "Country Threatening Treason". Truth Details | Truth Social
Mitt Romney told his biographer that he only recently realized that a substantial number of republicans did not believe in the Constitution. What Mitt Romney Saw in the Senate - The Atlantic Romney: "A very large portion of my party really doesn’t believe in the Constitution." Bit late on that epiphany. Scholar explains why he thinks the GOP has turned away from Democracy - YouTube
Romney was curious whether the large authoritarian contingent of Trump's party had always been there or whether it had been activated by a "shameless demagogue".
Hear what Trump reportedly said to General Mark Milley about injured veteran after this hug Trump told Milley that he did not want to meet wounded veterans at public events.
Trump on Late-Night Rage Bender At Howard Stern and Biden
Cassidy Hutchinson's new book reveals a Trump White House even more chaotic than previously known Cassidy quoting Trump who was talking to his Chief of Staff Mark Meadows: "I don’t want people to know we lost, Mark. This is embarrassing. Figure it out."
Tucker Carlson finds a new booster: Russian State Owned TV - The Washington Post
Video: Are whales going 'crazy' from windmill farms? CNN fact-checks Trump's claim
The House republicans have been unable to pass a budget which will cause a government shutdown at midnight today.
Most of the House republicans are willing to pass a budget resolution that would severely slash discretionary spending by 30%, except for defense and veterans benefits, that far exceeded what they agreed upon when passing the debt limit increase. House passes three more long-term spending bills, but agriculture bill fails - The Washington Post ("Had House Republicans’ stopgap bill been adopted, it would have cut hundreds of billions of dollars from programs important to millions of Americans, including nutritional aid for poor pregnant mothers, housing subsidies for low-income families, and medical research and environmental protection, among many other federal operations.")
So they have already reneged on that budget agreement. No effort was made by them to reach a bipartisan compromise. Yet in polling, republicans blame President Biden and the democrats for the upcoming shutdown.
If McCarthy's budget proposal was adopted in the House, which is not going to happen, that proposal would have also resulted in a government shutdown since no Democrat in the Senate would vote for it.
It is only a question of time before the House republicans cause a U.S. government debt default. The only way to prevent that from happening is keep them as a minority party until they grow up to be responsible adults.
+++++
Putin and His Empire of Misery:
Putin Is Worried, So He Turned to Anti-Semitism - The Atlantic
Last weekend, the Orcs targeted with their missiles and drones civilian structures in Odessa, including a hotel and a grain storage warehouse.
Ukraine claims that its attack on Russia's Black Sea Fleet headquarters, located in Sevastopol, Crimea, killed 34 officers including the Admiral Viktor Sokolov, the commander of Russia's Black Sea Fleet. The Admiral has appeared in two undated videos since that attack. Russian Black Sea Fleet commander seen at meeting after Ukraine said it killed him The second video was from an event that took place a few days before the attack. The importance of this attack is that it happened, indicating that Ukraine can hit targets in Crimea at will.
UN Investigators Find Growing Evidence of Russian War Crimes in Ukraine; Ukraine: Rape and torture by Russian forces continuing, rights experts report | UN News
Russia Encourages Genocide of Ukraine- UN Human Rights Report Commission-Anna from Ukraine - YouTube
Sweden is considering donating several Saab JAS 39 Gripen fighter jets to Ukraine. Sweden Considering Sending Fighter Jets To Ukraine; Swedish Ready to Send Jas Gripen Fighter Jets to Ukraine? - YouTube Ukrainian pilots are training on those planes now. Apparently, Sweden wants to be admitted to NATO, currently being blocked by Turkey, before giving some of those jets to Ukraine. A three way deal may be under consideration where the U.S. will allow Turkey to buy the F-16s in exchange for removing its block on Sweden's NATO membership and Sweden would then donate the Gripen fighter jets to Ukraine.
The foregoing has energized Putin's totally untrustworthy FM Lavrov to call Sweden Russia's main northern enemy and to make a number of knowingly false accusations against Sweden and the U.S. Lavrov furious, points out Russia's biggest enemy in the north
The NYT found that Russia has gained control over 331 square miles so far this year in Ukraine while Ukraine has recaptured only 143 square miles. The net gain for Russia is 188 square miles, smaller than Kiev. How the Front Line Has Barely Moved in Ukraine This Year - The New York Times Russia seems content in making some progress in capturing all of the Donbass, holding onto most of its currently occupied Ukrainian territory, and wearing down Ukraine and the willingness of its western allies to provide substantial military and economic support.
In a few weeks, weather will not permit the use of tanks and other heavy equipment. Small tactical unit advances, artillery, drone and missile attacks will continue. The life of Russian forces in undesirable living conditions will become even more miserable in the winter, as Ukraine continues its successful disruptions of supply chains and destruction of supplies needed to sustain the invading army, and possibly opening up opportunities for a renewed Ukrainian offensive in the Spring.
++++
1. Small Ball Buys - U.S. Equity Preferred Stocks:
I have been slowly increasing my allocation to fixed coupon U.S. equity preferred stocks. Price corrections have made the yields more attractive.
The persistent rise in the 10 year treasury yield is pressuring these securities to the downside.
A. Added to CTOPRA - Bought 5 at $18.5; 2 at $17.8:
The 2 share purchase was a partial fill for a 5 share limit order. This preferred stock will generally trade at wide bid/ask prices. Since I do not pay a brokerage commission, I do not care about partial fills of small odd lot orders.
Quote: CTO-PA
Cost: +$128.1
Issuer: CTO Realty Growth Inc. (CTO) - Externally Managed REIT
Investment Category: Advantages and Disadvantages of Equity REIT Cumulative Equity Preferred Stocks, a subcategory of Equity REIT Common and Preferred Stock Basket Strategy
Last Discussed: Item # 2.B. Added 5 CTOPRA at $ $19.4 (9/16/23 Post)
Par Value: $25
Coupon: 6.375%
Dividend: Paid quarterly, cumulative and non-qualified.
New Average Cost per share = $19.04 (22 shares)
Yield at New AC = 8.37% (.06375% coupon x. $25 par value = $1.59375 annual dividend per share ÷ $19.04 Total Cost per share = 8.37%)
Last Ex Dividend: 9/13/23 (owned 15 as of)
Stopper Clause: Standard
B. Added to GNLPRD - Bought 5 at $19.35; 5 at $18.2 - Fidelity Account:
Cost: $187.75
Global Net Lease, Inc. Announces Preferred Stock Dividends (9/25/23)(record date of 10/6, payment on 10/15, ex dividend is one business day prior to the record date; What Is an Ex-Dividend Date? | The Motley Fool)
Issuer: Global Net Lease Inc. (GNL) - Internally Managed Net Lease REIT
SEC Filed GNL Investor Presentation (9/18/23)
As previously discussed, this preferred stock was originally issued by the Necessary Retail REIT (RTL), using the symbol RTLPP. I owned a few shares of RTLPP. Item # 2.C.
RTL was recently acquired by Global Net Lease (GNL).
Upon consummation of that merger, RTLPP was automatically converted into GNLPRD. The terms did not change.
GNL did file a prospectus for this preferred stock: Prospectus
Par Value: $25
Coupon: 7.5% ($1.875 per share annually)
Average cost per share this account: $19.46 (30 shares)
Yield at AC per share: 9.635%
Next Ex Dividend: 10/5/23
Optional Redemption: On or after 3/26/24 at par value + accrued and unpaid dividends.
Stopper Clause: Standard but more convoluted than normal.
Cash can not be used to pay a common stock dividend or used to buy common stock unless the preferred dividend is paid including any prior deferred dividends.
The key phrase is at the end: "unless full cumulative dividends on the Series D Preferred Stock for all past Series D Dividend Periods shall have been or contemporaneously are declared and paid or declared and a sum sufficient for the payment thereof is set apart for such payment."
As part of the merger, the external management company for both RTL and GNL was paid $50M in cash and received 29.614+M GNL shares to go away. GNL is now internally managed.
The common stock will likely remain under pressure until all or most of those shares are sold. A prospectus relating to selling those shares and other shares owned by the former external management company and related parties has been filed with the SEC. The total number of shares included in that prospectus was up to 35.339+M.
C. Started FBRTPRE - Bought 10 at $20.03:
Cost = $200.3
Issuer: Franklin BSP Realty Trust Inc. (FBRT) - Externally Managed Mortgage REIT
FBRT Analyst Estimates | MarketWatch
FBRT is different from other mortgage REITs in that it originates mortgage loans, 77% of the loans are secured by apartment buildings, and approximately 98% of the loans are at floating rates. About 6% of the loans are secured by offices.
One hotel loan was removed from the FBRT's watch list after it was sold and the principal amount of the loan paid in full and an additional $20.5M that was classified as interest on the loan. 10-Q for the Q/E 6/30/23 at page 25 The removal of that nonaccrual loan reduced the nonperforming loan balance to $20.384M, page 25. Commercial mortgage loans held for investment stood at $5.023+B as of 6/30/23, page 1.
SEC Filed Earnings Report for the Q/E 6/30/23 (GAAP net income of $39.6M and an E.P.S. of $.39; distributable earnings per share = $.66)
Coupon: 7.5%
Par Value: $25
Dividends: Paid quarterly and cumulative
Stopper Clause: Standard
Yield at $20.03 = 9.36% (.075% coupon x. $25 par value = $1.875 annual dividend per share ÷ $20.03 Total Cost per share = 9.36%)
Last Ex Dividend Date: 9/28/23 (owned as of)
D. Added to TFINP - Bought 5 at $19.16:
Quote: Triumph Financial Inc. 7.125% Preferred Stock (TFINP)
Cost: $95.8
Issuer: Triumph Financial Inc. (TFIN)
TFIN SEC Filed Earnings Press Release for the Q/E 6/30/23
Par Value: $25
Coupon: 7.125%
New Average cost per share: $19.72 (15 shares)
Yield at New AC = 9.03%
Yield at $19.16 = 9.3%
Dividend: Paid quarterly and non-cumulative.
Maturity: None, potentially perpetual
Issuer Optional Call: At par value + accrued and unpaid dividends on or after 6/30/25
Last Ex Dividend: 9/14/23 (owned 10 as of)
Last Discussed: Item # 3.E. Bought 10 TFINP at $20 - Schwab Account (9/9/23 Post) I have nothing further to add to that recent discussion.
2. Small Ball Buys - Dividend Paying Common Stocks:
A. Added to WPC - Bought 2 at $59.8; 1 at $58.55; 1 at $56.65; 1 at $53.87:
Quote: W. P. Carey Inc. (WPC)
Cost $288.67
The stock price went into freefall after WPC announced that it would be selling or spinning off its office properties. W. P. Carey Announces Strategic Plan to Exit Office; SEC Filed Investor Presentation Prior to deciding on this exist, office properties only constituted about 16% of WPC's annualized base rent.
The plan is to spin-off 59 net leased office properties into a a separately traded REIT called Net Lease Office Properties (NLOP) and to sell the remaining 89 properties which is targeted for completion in January 2024. The end result will be to increase the weighting of industrial/warehouse properties in WPC's portfolio from 53% to 62%.
 |
| Page 5 Investor Presentation |
This disposition will increase the weighting in the remaining property sectors.
As reflected in the diving stock price after the announcement, investors hated this plan. It makes no sense to me and would use the word "idiotic" to describe it. Brokers responded by meaningfully lowering their price targets. WPC is pushing the plan ahead without shareholder approval.
The result will be a WPC dividend cut, the amount being currently unclear, and an uncertain realization of any dividends from NLOP.
WPC has raised its dividend every year since going public back in 1998. The REIT was about to become a Dividend Aristocrat, which requires 25 consecutive years of dividend increases, but the WPC Board and management thought it was more important to cut the dividend and dump the office properties that were not subject to net leases into a major down market.
A statement regarding resizing of the WPC dividend was made in the Investor Presentation at page 2: Target is 70 to 75% of pro forma AFFO. The current payout is based on about 80% of AFFO.
I did not see an estimate for 2024 pro forma AFFO. My best guess is that 70% of 2024 AFFO per share would reduce the quarterly dividend by $.20 to $.30 per share. That guess is based on the lower AFFO payout, the office property dispositions and the likely acquisition by U-Haul of WPC's storage properties early next year. It will take time to replace those rent revenues.
Structuring the transaction as taxable to U.S. shareholders is a major negative.
Moreover, selling office properties into a major down market, rather than waiting for conditions to improve, is probably the worst option or at least viewed as such by far too many investors.
The spinoff is expected to occur on or about 11/1/23 with the new REIT trading under the NLOP symbol. There is no rational reason for this spin off IMO.
The office properties that will be included in a new REIT represent about 10% of WPC's base annualized base rent as of 6/30/23.
The new REIT will pay WPC about $350M and assume about $169M in existing mortgage debt. NLOP has entered into a new $450M debt facility, apparently to fund that $350M payment and for operations if needed.
"As a separate company, NLOP will pursue a business plan focused on realizing value for its shareholders primarily through the strategic asset management and disposition of its property portfolio over time. It is anticipated that NLOP will pay distributions to its shareholders from its operating cash flows and disposition proceeds, after first repaying its obligations under the new debt facility. Given W. P. Carey's extensive knowledge of the assets that will form NLOP, the desire to maintain efficiency and the timeline for executing NLOP's business plan, W. P. Carey is expected to act as NLOP's external advisor following the Spin-Off."
That sounds like NLOP portfolio will gradually be liquidated with dividends paid only after the new debt facility is paid off. NLOP's new debt is expensive:
WPC will receive compensation as an external manager, receiving a $7.5M annual fee, reduced over time as properties are sold, and a flat $4.5M annual payment for administrative services.
"In addition to the Spin-Off, 87 office properties, which generated approximately $77 million of ABR and represented approximately 5% of W. P. Carey's total ABR as of June 30, 2023, will initially be retained on W. P. Carey's balance sheet and sold under the Office Sale Program, preserving certain tax efficiencies, with all sales targeted to be completed by January 2024. Properties representing over half of the ABR generated by assets within the Office Sale Program are currently either in the advanced stages of a sale or have been sold."
ABR: Contractual Minimum annualized base rent
Average cost per share this account: $64.55 (26+ shares)
Dividend: Quarterly at $1.071 per share
W. P. Carey Inc. (WPC) Dividend History | Seeking Alpha
Yield at AC per share: 6.64%
Since the dividend is about to be cut, most likely for the 2024 first quarter payment, I am not paying any attention to the current yield calculation.
Last Ex Dividend: 9/28/23 (owned all as of)
I discussed the last earnings report in this post: Item # 4.E. Added to WPC - Bought 1 at $68.6; 1 at $67.27; 2 at $66.25- Fidelity Taxable Account (6/24/23 Post); SEC Filed Press Release
I intend to eliminate more duplicate positions when the price recovers. I eliminated my smallest duplicate position, a 5 share lot held in my Vanguard taxable account, on the ex dividend date (See Item # 6.E. below)
SU Bonds: I own 12 WPC SU bonds. I view the disposition of office properties, the proceeds raised from the ones being sold, the $350M payment to be made by NLOP, and the offloading of the associated mortgage debts, to be slightly credit positive for the SU bonds which are currently rated Baa1/BBB+. The benefits are largely offset IMO by the loss of rental revenues. Overall, I do not anticipate a change in the credit ratings.
Current WPC SU Bond Positions:
4 WPC 4.6% SU bonds that mature on 4/1/24. Bond Page | FINRA.org
6 WPC 4% SU bonds maturing on 2/1/25 Bond Page | FINRA.org
2 WPC 4.25% SU bonds maturing on 10/1/2026 Bond Page | FINRA.org
10 of the 12 are owned in taxable accounts.
I will consider buying more early next year to replace the 4 maturing on 4/1/24, probably extending the maturity for the new purchase into 2026.
B. Added to RITM - Bought at $10.04; 5 at $9.63:
Quote: Rithm Capital Corp. (RITM) I classify RITM as a hybrid REIT.
Cost: $98.35
New Residential Investment Corp. Announces Internalization and Rebrand to Rithm Capital, and Declares Second Quarter 2022 Dividends To make the external manager go away, RITM had to pay $400M in cash. The company expects to recoup that amount at approximately $60M to $65M per year in cost savings.
I recently eliminated my duplicate position in this hybrid REIT. Item # 6.E. Eliminated Duplicate Position in RITM - Sold 30 at $10.3 (8/12/23 Post) I discussed the last earnings report in that post. SEC Filed Press Release
Dividend: Quarterly at $.25 per share
RITM Dividend History | Seeking Alpha
I am currently reinvesting the dividend.
New Average cost per share: $10.5 (162+ shares)
Yield at New AC = 9.52%
Last Ex Dividend: 9/28/23 (owned all as of)
Goal: Any total return in excess of the dividends.
C. Added to BNL - Bought 5 at $14.98; 5 at $14.74; 5 at $14.4; 5 at $14.24:
Cost: $291.8
"BNL is an industrial-focused, diversified net lease REIT that acquires, owns, and manages primarily single-tenant commercial real estate properties that are net leased on a long-term basis to a diversified group of tenants. Utilizing an investment strategy underpinned by strong fundamental credit analysis and prudent real estate underwriting, as of June 30, 2023, BNL’s diversified portfolio consisted of 801 individual net leased commercial properties with 794 properties located in 44 U.S. states and seven properties located in four Canadian provinces across the industrial, healthcare, restaurant, retail, and office property types."
ABR = Average Base Rent
"The ABR weighted average lease term and ABR weighted average annual minimum rent increase, pursuant to leases on properties in the portfolio as of June 30, 2023, was 10.7 years and 2.0%, respectively. "
The industrial property type, as a percentage of total ABR, was at 51.6% as of 6/30/23 (see Supplemental at page 23)
Investment Category: Equity REIT Common and Preferred Stock Basket Strategy
Last Discussed: Item # 1.L. Added to BNL - Bought 5 at $15.31 (5/27/23 Post) I discussed the first quarter report in that post.
New Average cost per share: $15.26 (40+ shares)
Dividend: Quarterly at $.28 per share ($1.12 annually), last raised from $.275 effective for the 2023 second quarter payment.
BNL Dividend History | Seeking Alpha
I am reinvesting the dividend.
Yield at New AC = 7.34%
Last Ex Dividend: 9/28/23 (owned all as of)
Last Earnings Report (Q/E 6/30/23):
SEC Filed Press Release and Supplemental
See page 20 of Supplemental for top 20 tenants.
Revenues: $109.953M
GAAP Net Income per share: $.32
FFO per share: $.37
Core FFO per share: $.38
AFFO per share: $.35
"At June 30, 2023, the weighted average interest rate on all outstanding borrowings was
$974.411M of the floating rate debt has been converted to fixed rate through interest rate swaps. (10-Q at page 17) "At June 30, 2023, the weighted average fixed rate on all outstanding interest rate swaps was
Occupancy: 99.4%
2023 AFFO guidance: $1.4 to $1.42 per share
D. Added to NWBI - Bought 5 at $9.95:
Quote: Northwest Bancshares Inc. (NWBI)
Cost: $38.6
NWBI Analyst Estimates | MarketWatch
Investment Category: Regional Bank Basket Strategy
Last Discussed: Item # 2.G. Added to NWBI - Bought 2 at $11.2; 3 at $10.75 (5/6/23 Post) I discussed the 2023 first quarter report in that post. SEC Filing
New Average cost per share: $11.22 (20 shares)
Working my way up slowly to 100 shares.
Dividend: Quarterly at $.20 per share, last raised from $.19 effective for the 2021 second quarter payment.
NWBI Dividend History | Seeking Alpha
Yield at New AC: 7.13%
Last Ex Dividend: 8/2/23 (owned 15 as of)
Last Earnings Report (Q/E 6/30/23): SEC Filed Press Release
Comparisons are to the 2022 second quarter
Net Income: $33M
E.P.S. = $.26, unchanged
Consensus estimate at $.26
The current E.P.S. consensus for the third quarter is $.25 and $.22 for the 4th quarter.
NIM = 3.28%, up from 3.07% but down from 3.47% in the first quarter.
Efficiency Ratio: 60.3% ex items
NPL Ratio: .7%, down from .95%
NPA Ratio: .56%, down from .71%
Coverage Ratio: 157.26% (allowance for credit losses to nonperforming loans)
Charge off Ratio: .1%
ROTE: 11.79%
ROE: 8.72%
Tangible Book Value per share: $8.84
Uninsured Deposit Information: Adjusted to 12.47% from 24.83%
Number of Banking Offices: 142
Sell Discussions: Item # 1.I. Eliminated NWBI - Sold 15 at $10.48 (9/5/2020 Post); Item # 1 Sold 156+ NWBI at $12.52 (6/30/11 Post); Item # 2 Sold 50 NWBI at $12.5 (2/22/11 Post)
NWBI Realized Gains to Date: $216.75
E. Added to AHH - Bought 5 at $10.84; 5 at $10.21:
10-Q for the Q/E 6/30/23 (See page 19 for information on interest rate swap agreements that convert floating rates to fixed rates. Many of those swaps mature on 4/1/24 or sooner, which is a negative)
Website: Armada Hoffler
AHH owns office, apartment and retail properties and also engages in construction. Armada Hoffler Construction
Commercial Properties:
Last Discussed: Item # 4. Bought 10 AHH at $11.94 (11/29/22 Post)
New Average cost per share: $11.23 (20 shares)
Slowly working my way up to 100 shares.
My major concerns are the office property exposure, the reliance on floating rate debt and the upcoming expirations of swap agreements that fix the floating rate debts. Those are sufficient to cause me to go really slow in building that 100 share position.
Dividend: Quarterly at $.195 per share ($.78 annually)
Yield at new AC = 6.95%
Last Ex Dividend: 9/26/23 (owned 15 shares as of)
Last Stock Offering (1/2022): Prospectus
AHH has an ATM program for its 6.75% cumulative preferred stock Prospectus I currently own 10 AHHPRA shares.
Last Earnings Report (Q/E 6/30/23):
SEC Filed Press Release and Supplemental
GAAP Net Income per share: $.13
FFO per share: $.35
Normalized FFO per share: $.32
AFFO per share: $.25
Of those numbers, I view AFFO to be the most important for dividend coverage.
Occupancy by property segment:
Quote: NNN REIT Inc. - A Net Lease REIT similar to Realty Income (O).
Cost: $179.52
Retail Properties | Our Portfolio | NNN REIT
Last Bond Offering (8/23): Prospectus for $500M 5.6% SU maturing in 2033. Of the net proceeds, $270.5M will be used to pay off the entire amount owed in NNN's credit facility, which currently costs NNN more than 5.6%. The credit facility is at spreads to a short term SOFR rate. 10-Q at page 27
New Average cost per share: $40.37 (35 shares)
Working my way up slowly to 100 shares. I am likely to increase my purchases to 5 shares provided each subsequent purchase is at the lower price paid in the chain.
Dividend: Quarterly at $.565 per share ($2.26 annually)
NNN REIT, Inc. Common Stock (NNN) Dividend History | Nasdaq
Yield at New AC = 5.6%
Last Ex Dividend: 7/28/23 (owned 7 shares as of)
I discussed the last earnings report in this post: Item # 4.D. Added 3 NNN at $41.42; 2 at $40.1 (8/5/23 Post); SEC Filed Earnings Press Release
NNN SU Bond: I own 2 NNN 3.9% SU bonds that mature on 6/15/24, which is the next SU maturity (see 10-Q at page 28). Item # 3.F. Bought 2 NNN REIT 3.9% SU at a Total Cost of 98.204 (6/10/23 Post); Bond Page | FINRA.org
G. Added to DOC - Bought 5 at $12; 5 at $11.85:
Quote: Physicians Realty Trust (DOC) - Internally Managed REIT
Cost: $119.25
New Average Cost per share = $13.27 (55+ shares)
I will continue to average down until I hit 100 shares.
Dividend: Quarterly at $.23 per share ($.92 annually)
I am reinvesting the dividend
Yield at New AC = 6.93%
Next Ex Dividend: 10/2/23
I discussed the 2023 second quarter earnings report in my last post and have nothing further to add here. Item # 1.D. Added to DOC - Bought 5 at $13.13; 5 at $12.95; 5 at $12.75; 5 at $12.38 (9/23/23 Post); SEC Filed Earnings Press Release for the Q/E 6/30/23 and Supplemental
H. Restarted IVZ in Schwab Account - Bought 5 at $14.42; 5 at $14:
4 Year History this Account:
Quote: INVESCO Ltd. (IVZ)
Cost: $142.1
IVZ is an investment management firm that sponsors a large number of ETFs, CEFs, and mutual funds. The most well known ETF is probably QQQ. Individual investor | Invesco US; Invesco QQQ
Invesco Ltd. Announces July 31, 2023 Assets Under Management
As reflected in the preceding snapshots, the prior eliminations were at $17.30 and $19.5 on 11/14/22.
Last Buy Discussions: Item Item # 5.A. Added 5 IVZ at $13.9 (10/18/22 Post); Item # 2.A. Restarted IVZ in Schwab Account- Bought 10 at $16.93; 5 at $16.25 (8/2/22 Post)
Sell Discussions: Item # 4.C. Eliminated IVZ - Sold 20 at $19.5 (11/22/22 Post)(profit snapshot = +$69.66); Item # 1.E. Eliminated IVZ in Vanguard Taxable Account-Sold 10 at $18.91 (2/6/21 Post)(profit snapshot = $105.91); Item # 1.A. Sold 83+ at $17.3-Schwab Account and Item # 1.B. Sold 71+ IVZ in Fidelity Taxable Account at $17.39 (1/1/21 Post)(profit snapshots = $330.88)
Average cost per share = $14.21 (10 shares)
Dividend: Quarterly at $.20 per share, last raised from $.1875 effective for the 2023 second quarter.
IVZ Dividend History | Seeking Alpha
Yield at $14.21: 5.63%
Last Ex Dividend: 8/10/23
Last Earnings Report (Q/E 6/30/23): SEC Filing
IVZ earnings are generally dependent on 3 factors: (1) the total assets under management (AUM); (2) the prices of those assets and (3) fee waivers. The fee waivers existed during ZIRP for the money market funds and were necessary to keep the yield at zero or barely positive.
"Net long-term outflows were $2.0 billion for the second quarter of 2023, as compared to $2.9 billion of net long-term inflows in the first quarter." This does not include money market inflows of $15.4B which are not included in the IVZ definition of "long-term".
E.P.S. = $.29, up from $.26 in the 2022 second quarter but down from $.32 in the 2023 first quarter.
SU Bond: I own 2 Invesco Finance 4% SU bonds that mature on 1/30/24, rated at A3/BBB+. Bond Page | FINRA.org The bonds are guaranteed by Invesco. Item # 1.E. Bought 2 Invesco Finance 4% SU Maturing on 1/30/24 at a Total Cost of 98.395 (11/29/22 Post)
IVZ Trading Profits: $506.45
I. Added to O - Bought 1 at $51.16; 1 at $50.78; 1 at $50.22; 2 at $50; 1 at $49.74 :
Quote: Realty Income Corp. (O)
Cost: $301.9
Investment Category: Equity REIT Common and Preferred Stock Basket Strategy
New Average Cost per share: $54.49 (26 shares)
Dividend: Monthly at $.256 per share ($3.072 annually)
Dividend Payment Information | Realty Income
Yield at New AC = 5.64%
Last Ex Dividend: 9/29/23 (owned all as of)
Last Discussed: Item # 1.E. Added to O - Bought 1 at $54.45; 1 at $54.17; 1 at $52.82; 1 at $52.35; 2 at $52; 1 at $51.57 (9/23/23 Post);
Last Earnings Report (Q/E 6/30/23): I discussed the last earnings report in this post: Item # 2.D. Added to O - Bought 3 at $58.97; 1 at $58.63; 2 at $58.08; 2 at $56.9 (8/19/23 Post);
SEC Filed Press Release and Supplemental
I will continue averaging down in 1 or 2 share lots, possibly switching to 5 share purchases when and if the price sinks below $45.
Last Round-Trip: Item # 1. Eliminated Realty Income (O)- Sold 100 at $52.37 -Seeking Alpha (profit snapshot = $1,579.6)-Item # 6 Bough 100 Realty Income (O) at $36.96 (12/10/13 Post)
3. Treasury Purchases at Auctions:
I have $31K in maturities next week. Of that amount, at least $10K will be used to buy the 2 month T Bill at next week's auction.
A. Bought 5 Treasury Bills at the the 9/25/23 Auction:
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Matures on 12/28/23
91 Day Bill
Interest: $67.36
Investment Rate: 5.493%
B. Bought 1 Treasury Note at the 9/26/23 Auction:
2 Year Treasury Note:
Coupon: 5%
Sold at 99.84002
Original Issue Discount: $1.6 per $1,000
OID is taxable as interest.
The OID raises the yield to 5.085%
C. Bought 4 Treasury Bills at the 9/28/23 Auction:
56 Day Bill
Matures on 11/28/23
Interest: $33.16
Investment Rate: 5.464%
4. Corporate Bonds:
A. Bought 2 Ventas 3.5% SU Maturing on 4/15/24 at a Total Cost of 98.643:
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Issuer: Operating Entity for Ventas Inc. (VTR) who guarantees the notes.
SEC Filed Earnings Press Release for the Q/E 6/30/23
New Finra Page: Bond Page | FINRA.org
Credit Ratings: Baa1/BBB+
YTM at Total Cost: 6.067%
Current Yield at TC = 3.548%
B. Bought 2 Essex Portfolio L.P. 3.875% SU Maturing on 5/1/24 at a Total Cost of 98.574:
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Issuer: Operating entity Essex Property Trust Inc. (ESS) who guarantees the notes.
SEC Filed Report for the Q/E 6/30/23
Prospectus (relevant information starts at page 59.
New Finra Page: Bond Page | FINRA.org
Credit Ratings: Baa1/BBB+
YTM at Total Cost: 6.409%
Current Yield at TC = 3.93%
I now own 6 bonds which includes 2 owned in a Roth IRA account.
5. Eliminated SWZ - Sold 100 at $7.7:
Quote: Swiss Helvetia Fund Inc. Overview - A Stock CEF that owns stocks of companies based in Switzerland.
Proceeds: $769.99
SEC Filed Semiannual Report for the period ending 6/30/23
Sponsor's website: Schroders | SWZ
Top 10 Holdings as of 8/31/23:
Profit Snapshot: +$96.65 (9/25/23 sale only)
Last Buy Discussion: Item # 3.H. Added to SWZ - Bought 5 at $6.65 (10/4/22 Post)
Data Date of 9/25/23 Trade:
Closing Net Asset value per share: $9.11
Closing Market Price: $7.74
Discount: -15.04%
Average 3 Year Discount: -13.9%
Sourced: SWZ - CEF Connect (Click "Pricing Information" tab)
Dividends: Quarterly at $.12285 per share ($.4914 annually), cut from $.1665 effective for the 2022 4th quarter dividend.
This is a managed distribution and has been supported some by ROC in some recent quarterly distributions. The only way to entirely cover this payout is with capital gains.
There was a $4.91 per share special distribution paid in the 2018 4th quarter. The Swiss Helvetia Fund, Inc. Announces Details Of Stock Dividend Payable On October 19, 2018
Last Sell Discussion: Item # 1.J. Sold Remaining SWZ Shares Purchased with Dividends at $10 (9/24/21 Post)
6. Other Small Ball Sells:
A. Pared SU - Sold Highest Cost 4+ shares at $34.2 - Fidelity Account:
Quotes:
CAD: Suncor Energy Inc. (Canada: Toronto)
Canadian Dollar to US Dollar Exchange Rate Chart | Xe
Proceeds: $152.91
Last Buy Discussion: Item # 2.K. Added to SU in Vanguard Taxable Account-Bought 2 SU at $20.93 (5/8/21 Post)
Website: Suncor
SU Analyst Estimates | MarketWatch
SEC Filings (foreign company forms)
Profit Snapshot: +$71.89
Average cost per share after pare: US$13.83 (14+ shares)
 |
| Snapshot Intraday on 9/25/23 after pare |
Dividend: Quarterly at C$.52 per share (C$2.08 annually), last raised from C$.47 effective for the 2022 4th quarter payment. I am not reinvesting the dividends.
Dividend yield: The yield at US$13.83 before Canada's 15% withholding tax will vary with the CAD/USD exchange rate which has recently been holding steady mostly in a .74 to .76 range.
The last four quarterly payments in USDs totalled US$1.54. SU Dividend History-Seeking Alpha Using that TTM annual dividend rate, the yield at C$13.83 is about 11.37%. I am expected a dividend increase in the 4th quarter.
Last Ex Dividend: 8/31/23
Last Earnings Report (Q/E 6/30/23): Earnings declined significantly compared to the 2022 second quarter due to a decline in energy prices.
All amounts are in Canadian Dollars:
Adjusted E.P.S. : C$.96, down from C$2.71
The primary adjustments to E.P.S. were to remove a C$607M gain on an asset sale and a C$244M unrealized loss on USD denominated debt and to add back a C$275M restructuring charge.
When investing in energy E&P stocks, wide variations in earnings are normal. And, generally, forward E.P.S. estimates can be way off, up or down, compared to the actual numbers as later reported. Those factors just go with the territory.
Sell Discussions: Item # 1.I. Eliminated SU in 2 Taxable Accounts - Sold 8 at $33.09; 10 at $33.29 (2/13/23 Post)(profit snapshots = US$273); Item # 4.D. Sold 2 SU in Schwab Taxable Account at $35.8 (11/22/22 Post)(profit snapshot = $25.05); Item # 6.E. Pared SU - Sold 4 at $33.13 in Fidelity Taxable Account (11/1/22 Post)(profit snapshot = $43.97); Item # 2.H. Pared SU in Fidelity Taxable Account - Sold Highest Cost 10 Shares at $40.1 and 7 at $40.6 (6/9/22 Post)(profit snapshot = $237.35); Item # 2.E. Pared SU in Fidelity Taxable Account - Sold 10 at $36.77 (5/12/22 Post)(profit snapshot = $72.19); Item # 2 Sold 50 SU at $40.95 - Elimination (8/16/14 Post)(profit snapshot = $598.08)
SU Realized Gain to Date: US$1,321.53
B. Eliminated UNM - Sold 5 at $50.18:
Quote: Unum Group (UNM)
Proceeds: $250.9
Corporate Profile - UNUM GROUP
UNM Analyst Estimates | MarketWatch
Last Discussed: Item #1.K. Bought 5 UNM at $16.2 (11/21/20 Post)
Profit Snapshot: $169.9
Dividend: Quarterly at $.365, last raised from $.33 effective for the 2023 third quarter.
UNM Dividend History | Seeking Alpha
Last Ex Dividend: 7/27/23
Last Earnings Report (Q/E 6/30/23): SEC Filed Press Release
"Net income of $392.9 million ($1.98 per diluted common share) for the second quarter of 2023; after-tax adjusted operating income was $408.8 million ($2.06 per diluted common share)."
Net Income to Operating Income:
C. Pared OFS in Schwab Account - Sold 20 at $10.86:
Quote: OFS Capital Corp - Externally Managed BDC
Proceeds: $217.29
Last Buy Discussions: Item # 3.F. Bought 40 OFS with an Average Cost Per share of $4.18 (11/7/20 Post); Item # 2.L. Added 5 OFS at $3.97-Fidelity Taxable (11/28/20 Post); Item # 1.K. Added 3 OFS at $4.5 -Fidelity Taxable (8/8/20 Post); Item # 3.E. Added 5 OFS at $9.66; 5 at $9.2; 5 at $8.7; 5 at $6; 5 at $5.65; 2 at $3.7; 10 at $3.79 (4/11/20 Post)
Last Sell Discussion: Item # 3.A. Eliminated OFS in Vanguard Account - Sold 20 at $10.2 and Item # 3.B. Pared OFS in my Fidelity Account -Sold 10 at $10.15 (8/19/23 Post)(profit snapshots = $182.5) That pare reduced my average cost per share in my Fidelity Account to $3.89 which produces a 34.96% yield at the current dividend rate. I discussed the last earnings report in Item # 3.A.
Profit Snapshot: $28.94
New Average cost per share this account: $7.19 (111+ shares)
 |
| Snapshot Intraday on 9/26/23 after pare |
Dividend: Quarterly at $.34 per share ($1.36 annually)
OFS Dividend History | Seeking Alpha
Yield at $7.19: 18.92% (regular dividend only)
OFS Realized Gains to Date: $666.55
Goal: Any total return in excess of the dividend payments.
On 9/29/23, I received an OFS $44.67 quarterly dividend in this account:
D. Eliminated ORI - Sold 13+ at $27.27:
Proceeds: $361.96
ORI - Old Republic International Corporation Profile | Reuters
Old Republic International Corporation - Investor Relations
ORI Analyst Estimates (On 9/26/23, the 2023 consensus E.P.S. estimate was $2.52, down from $2.56 in 2022. The estimates for 2024 and 2025 were then at $2.64 and $2.78 respectively.)
Profit Snapshot: $156.82
Last Discussed: Item # 1.N. Added to ORI - Bought 2 at $14.18; 1 at $14.16 (10/17/20 Post)
Dividend: Quarterly at $.245 per share, last raised from $.23 effective for the 2023 second quarter. A $1 per share special dividend was paid in the 2022 third quarter. Old Republic Announces Share Repurchase Authorization and Special Dividend (8/19/22 Press Release, the total special dividend was $760M)
Old Republic International Corporation - Stock Information - Dividends and Splits
Last Ex Dividend: 9/4/23 (owned as of)
Last Earnings Report (Q/E 6/30/23): SEC Filed Press Release
SU Bonds: I own 2 ORI 4.875% SU bonds that mature on 10/1/24. Bond Page | FINRA.org
E. Eliminated one Duplicate WPC Position - Sold 5 at $54.2 in my Schwab Account:
Quote: W. P. Carey Inc. (WPC)
Proceeds: $211.48
See Item # 2.A. above.
Profit Snapshot: $59.5
One reason for selling this 5 share lot is that I would unlikely receive 1 NLOP share for the 5 WPC shares and the fractional share would be liquidated into cash creating an accounting headache that was not worth the trouble.
7. FDIC Insured CD:
A. Bought 1 Weststar Bank 5.5% CD Maturing on 1/10/25- Schwab Account:
Interest is paid monthly. I simply redeployed the proceeds from 1 Zions 5.25% CD that matured yesterday, as shown in the previous snapshot.
8. Cash Flow into Fidelity Account on Monday 10/2/23:
Bond Redemptions: $5,000
I will probably use at least $4K of this amount to buy corporate bonds, maturing in 2024-2025, next week.
Interest and Dividends:
Tax Exempt Interest (Tennessee Municipal Bonds): $568.76
Senior Unsecured $1K Par Value Corporate Bonds: $637
First Mortgage $1K Par Value Corporate Bonds: $68.9 (Entergy Arkansas, Entergy Louisiana)
Treasury Notes with Coupons: $46.26
CDs (monthly interest): $33.61
Exchange Traded First Mortgage Bond: $13.78 (EMP)
CEFs and ETFs: $50.08 (of which $45.6 monthly dividends)
Common stocks: $27.83
Equity Preferred Stocks: $11.48
Dividends/Interest Total: $1,454.7
Disclaimer: I am not a financial advisor, but simply an individual investor who has been managing my own money since I was a teenager. In this post, I am acting solely as a financial journalist focusing on my own investments. The information contained in this post is not intended to be a complete description or summary of all available data relevant to making an investment decision. Instead, I am merely expressing some of the reasons underlying the purchase or sale of securities. Nothing in this post is intended to constitute investment or legal advice or a recommendation to buy or to sell. All investors need to perform their own due diligence before making any financial decision which requires at a minimum reading original source material available at the SEC and elsewhere. A failure to perform due diligence only increases what I call "error creep". Stocks, Bonds & Politics: ERROR CREEP and the INVESTING PROCESS Each investor needs to assess a potential investment taking into account their personal risk tolerances, goals, and situational risks. I can only make that kind of assessment for myself and my family members.
