No. of Recommendations: 12
Forgive me, but I have one and a half picks:

CLNY-pA is my real money pick. I have added more shares since the 5/17 downturn. CLNY is one of only two MREITs that I would consider investing in, the other being STWD. The main consideration is that it is a low leverage MREIT, at about 1.4X. Contrast that to MREITs like NLY and AGNC that are leveraged >5X. If you invest in either CLNY or STWD, you must accept on faith that they have their "paper" marked correctly. Both of them own some amount of "distressed" and/or "non-performing" debt. The particular loan is likely the only one in the world with those particulars. Like a non-performing $1 million loan on a bowling alley in Keokuk, Iowa. What is it worth? We are 100% dependent on CLNY correctly valuing it. CLNY has about 1/3rd of its assets in single family homes, but it is attempting to spin those out to a separate REIT. I bought the preferred to have a little more safety, being ultra conservative. It has an 8.5% coupon. It closed @27.32 on 5/17. It closed Friday @25.77 for current yield =8.25% and yield to first call =7.56%. The preferred dividend is strongly covered by FFO, but if we have another 2008, lord knows if CLNY will have adequate coverage. It is DEFINITELY higher risk in general than equity REIT preferreds.

My one-half pick is a strong one: Howard Hughes Company aka HHC. It is NOT a REIT, but is a real estate company. It was spun out of GGP during the bankruptcy process. I made it one of my Pick Six choices for 2013. I did NOT and have NOT invested any real money in it. BIG MISTAKE. It is up 55.3% YTD which is slightly ahead of the REIT indices @~ 4.5%. Since the 5/17/13 downturn started, it is UP 1.3% compared to the median REIT which is down 11.1%. Only problem is that I do NOT understand the business. I have not taken the time to dig into their reports. It seemed intriguing and still does, but you must do some due diligence before investing in it. Since it has a short track record independent of GGP, it has a lot of one time charges and adjustments. These need to be rationalized to see if they leave a sustainable, growing business model.


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