2 Huge REIT Preferreds Issued

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Late last week we had 2 new huge REIT preferred issues come to market.  Self-storage giant Public Storage (NYSE:PSA) sold 10 million shares with a meager 5.15% coupon, while diversified REIT Colony Northstar (NYSE:CLNS) sold a 12 million share issue.  As preferred stock offerings these are considered very large issues.

PSA of course has many preferred issues outstanding (15 including this new issue) with coupons ranging from 4.9% to 6.375% so really there is no reason to even consider this new issue.  If an investor wanted to own a PSA preferred it is likely they already have shares in their portfolio.  Additionally other issues of Public Storage around this coupon rate are trading around $25 so there is likely no capital gains to be anticipated.

PSA will add the cash from this offering to their cash balances to be used in acquisitions.


Details of this issue can be found here.  This issue is currently trading at around $24.90 on the OTC Grey market under ticker PSBPP.

Colony Northstar has sold the new issue with the intention to redeem some high yield preferreds that were yet outstanding.  The preferred series A issue will be redeemed and it carried a coupon of 8.75% while the company’s preferred series F carried a coupon of 8.5%.  Certainly CLNS will save some money by “refinancing” these old preferred issues while investors like us will have 2 less high yield options to invest in.

Details of this issue can be found here.  This issue is also now trading on the OTC Grey market under the ticker CLNYP.  It is priced around $25.05.

As is normal with REIT preferreds these issues are cumulative in respect to dividends and the distributions will NOT be qualified for preferential tax treatments as REITs and REIT preferreds are non qualified.


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Tim McPartland

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Tim McPartland
Tim McPartland is a private investor with over 45 years of investing experience. His analysis, research and writing is devoted to the hunt for income producing securities of all types, but in particular specializing in preferred stocks, exchange traded debt and Master Limited Partnerships.
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