I haven't provided an opinion on the new BFS pfd for two reasons: (a) I haven't been to our Board for two weeks (except for a quick post or two) - blame the SuperBowl, and (b) I really haven't followed BFS for a long time.

There is nothing of value that I can add to the discussion regarding the merits of BFSpC. Just looking at a BFS chart, the stock doesn’t seem to have done as well as its peers, e.g., RPT, REG, KIM or WRI – but that doesn’t tell us very much. Most importantly, I don’t know the properties or the management, which are really important.

Other metrics: Debt looks to be about 50% of total market cap, which seems about right for a 6.85% yield – so I don’t think the pricing is terribly rich or terribly cheap, on that basis.

But, I kinda like the new GGPpA (trading in the pinks as GGPYP). I was able to buy a few thousand shares on Friday, all at prices below par. It’s got more debt leverage than I would like, at about 55%, and a debt/ebitda ratio of 9x. However, mall owners, particularly those owning high quality malls such as GGP, have very stable cash flows; the new management team is getting good grades from dedicated REIT investors.

I think their new pfd is pretty safe. They have free cash flow of close to $850MM, and their annual pfd dividends will be only about $16MM ($250MM at 6.375%). That is really good coverage. And their dividend payout ratio is only 54% of estimated AFFO.

I have wondered about why these new pfds are often available in the pinks at less than par, as has been the case with GGPpA. In thinking about this, I realized that the underwriters are paying well below par; for example, if there is a 3% underwriting discount, they are buying the stock from the company at $24.25. Thus they can flip the stock to longer-term investors like us at, say, $24.80 and still make quite a few bucks.

Ralph