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I sold my CLNY shares a while back & redeployed the capital.

Heard tonight that the WSJ is reporting that Trump's Inaugural Committee is now being investigated around "pay to play" allegations.

As we all know the head of the Inaugural Committee was Tom Barrack Founder, Exec. Chairman & CEO of Colony Capital.

President Donald Trump's 2017 inaugural committee is currently being investigated by federal prosecutors in New York for possible financial abuses related to the more than $100 million in donations raised for his inauguration, according to a source familiar with the matter.

snip

Tom Barrack, a real estate developer who ran the inaugural committee, has not yet spoken with investigators since an interview he had with the special counsel last year, a source familiar with the matter told CNN. During his conversation with Mueller, the inaugural fund was only raised briefly, the source said.

https://www.cnn.com/2018/12/13/politics/trump-inauguration-s...

Frank - no position in CLNY, see profile for all holdings
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Thanks for the link, Frank. I do wonder if that's part of what's hurting the stock now.

Jim
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I couldn't find it, but I thought I suggested this risk to this board ~1+ years ago?!

If someone can find it, link it so I can take a victory lap, haha!
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Yeah, I seem to recall that, Rob.

Jim
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Well, this is germane to a strategy I was contemplating. I am building a new home with proceeds from either a HEL or a 1/3 year ARM on my current home (unencumbered as of today). The advantages of the HEL is the funds are there when I need them and not before, however, if rates go up, so does my interest payment. The ARM locks me in at a rate either at or half a point lower than the current HEL and that seems to be attractive. The downside is I need to borrow everything up front. I was planning to lock into the ARM and invest the proceeds that I don't need immediately into the CLNY-PRB, which is callable in May. I don't know if it's a good assumption that they will call the B shares and what other risks I am assuming with this strategy. On the surface, I am investing funds I pay 4% to acquire at double that return to mitigate the fact that I need to borrow up front. Additionally, I insulate myself from interest rate increases for the next year. Thoughts anyone?

Thanks,
Vince
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I like GLIBP better. In a taxable account those dividends are 15% dividends, whereas the CLNY dividends are not. They will be taxed as ordinary income? Because they are not the REIT dividends from CLNY itself which have a new tax schema.

GLIBP will pay you 7.27% before taxes, or 6.1% after taxes. I don't think you will get that from CLNY-PRB, although I understand the expectation of redemption is attractive to you as greater certainty of return of capital, too.


Hope that expands your field of view a little, though.

-Another Rob
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Rob,
Yes, I have some of that as well and that sounds like a better alternative under the circumstances. Am I understating the default risk here? Is there a reason not to do this?
Vince
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Rising rates will reduce REIT values over the short term, usually.
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ML--

Just to be clear, we're not discussing any actual REIT here. We're discussing 2 preferred stocks and discussing yield-to-maturity, yield, potential for loss of capital, and after-tax-yield.

1) A preferred of a 'normal' corporation can yield qualified dividends, which are eligible for the 15% rate.
2) A preferred of a tax advantaged vehicle (a REIT) does not qualify, and so the yield on the preferred is taxed at ordinary income rates. (Not sure if there's any new REIT tax law for the preferred from a REIT.)
3) The CLNY-PRB is something we expect will be redeemed shortly, providing some certainty of return of the face value.


I think that recaps the issues at hand. I suppose your observation about rising rates is true for potentially lowering the price of GLIBP, since we have no reason to expect redemption soon.


-Another Rob
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Hi Vince,

I had a HEL in place for emergency use before the housing market crumpled. As soon as things got to the point where I thought I could use it, the lender, a major one, cancelled it.

Don't trust anything until you have the cash in hand!

-srockaz
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