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Industry Discussions / Real Estate Inv. Trusts: REITs


Subject:  Re: QTS-B convertible Date:  4/26/2019  12:50 AM
Author:  Kingran Number:  84688 of 86799

What bothers me is that at $110.21 (today's closing price) QTS-B is trading at a premium

The preferred's are protected from conversion till 2023. So, the preferred's are trading today at $52 conversion price (if you are stickler to the decimals then $51.83).

Now, think of the protection till 2023 as a call option on the stock or in much simpler terms the current preferred price assumes the stock will gain at 3.25% per year, not a big hurdle right?

2019 45.63
2020 47.112975
2021 48.64414669
2022 50.22508145
2023 51.8573966

Suppose if the stock gains 5% CAGR then you are seeing the stock price at $55 and that would value the preferred's at $116.95, 8% CAGR would value the stock price at $62, and the preferred at $131.

The worst case, you will continue to receive 5.9% or you get 5.9% and some cap gains.

What am I missing ? what is your concern?

PS: Thanks Jim for bringing this to the board.
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