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If you do some research on DDS, you'll find they own a ton of real estate and also have a reasonable capital structure. I believe their debt is trading at attractive prices relative to yields elsewhere. Depending on how far out you go on the curve, you can buy 7.75's of '27 for 97.5 or 8.02% CY. If you only go out 7 or 8 years, instead of 17, you'll get 40-50 bps less. Although debentures, this paper has a lot of real estate behind it.

http://investinginbonds.com/corporatebonds/(tmwe1l45bveez355...

All issues:

http://investinginbonds.com/corporatebonds/(tmwe1l45bveez355...

I'm not a buyer because I don't buy bonds, but if I did run a diversified bond portfolio, buying up and down the yield curve and credit spectrum, I'd think about picking this up.
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LONGREITS:

I think I remember reading on TMF REITS board that Dilliards was considering the spin off their real estate into a publicly traded REIT. If so, Dilliard's would become a renter of the REIT's real estate and quite possibly Dilliard's debt would no longer be supported by the real estate (although I wonder if the debt would be covered by some type of covenant or if the debt would go to the REIT).

Do you have any memory or knowledge of this?

If the debt were to become an obligation of the spun off REIT, I would think the debt might be quite attractive, assuming Dilliards did not "trash" the REIT's balance sheet.
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I do not know the effect of any potential spin-off on the debentures - however, I find it hard to believe the debt's covenants would allow for the real estate to be transferred to another entity without any form of equivalent credit enhancement. I'd read the indenture if I was serious about buying the issue - maybe I'll move from an all stock to an all bond portfolio when blue chip equity prices take off and bond prices become depressed.
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No. of Recommendations: 2
Dillards has a 7.5% trust preferred ticker DDT.

http://www.quantumonline.com/search.cfm?tickersymbol=DDT&...

I have owned it for years. So far it has always paid on time.

Dillards came close to bk during the recession. People were quite concerned about their survival. But they seem to have turned the corner. DDT not long ago was deeply discounted. Now it trades close to par.

But note QuantumOnLine still rates it CCC+. Clearly this is a junk bond issue. Not for the feint of heart. And certainly not a good place for the rent money. OK as part of diversified portfolio for those willing to take the risk.

I also track Dillard's common stock. It has been doing very well and I have considered buying some, but tend to shy away from retailers as their stocks are forever in the news and going up or down. Too volatile compared to industrials for me.
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No. of Recommendations: 1
Thanks for posting this. Awhile back, I looked at a retail play, SuperValu because someone was very bullish on their bonds. But their near $7B in debt almost made me fall out of my chair. Supervalu also does not have allot of cash on hand and they are operating on pretty thin profit margins.

Dillards on the other hand, as far as retail junk plays goes, looks allot better with a 3-1 debt to cash equity ratio. I am looking into them further and will watch for now. Definitely a much much better risk reward than some of the other plays I have come across in this credit quality pool.
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