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No. of Recommendations: 2
I was pleased to be able to purchase some ARE-A on Friday at 25.66. I think this is quite a good value at a 9.27% yield and going ex-dividend in under a month. Additionally I shorted DRE and purchased the DRE-D convertible as a short term trade hoping to capture a half a point. If you take into account the fact that DRE already went Ex-div in May and DRE-D goes ex-div in 3 days, DRE-D actually trades at a slight discount to it's conversion value into DRE. I expect the market to rectify this temporary anomaly and take a small quick profit. Lastly, one I mentioned earlier, shorting OHI to protect a long position in OHI-A. So far so good as OHI has dropped almost 10 percent. I consider REITs at these prices to be trading/arbitrage type vehicles only. My only longs are LTC and VNO. In the case of VNO, I picked up in the last sell-off and may take a profit at any time. LTC is the only long term hold. I sort of consider my OHI-A long position more of a long term common stock position than a preferred stock position. It is really a bet on the turnaround of OHI so it is like a common stock position, but it has a wonderful growing annuity as the back dividends continue to pile up. On the short side, I continue to be short HPT, PPS, USV and MAL. The short position in MAL is a holdover from what turned out to be a very successful artitrage play mentioned earlier -- going long the MAL bonds and shorting MAL. I took my profit in the MAL bonds several weeks ago and continue to hold my short position in MAL. I may cover this position as soon as Monday, and I am not making shorting MAL a recommendation. As a matter of fact, since it is well below 5 now, it may be difficult for anyone to short it.
I think the REIT and REIT preferred markets currently provide some wonderful trading opportunities. I clearly missed out on some nice moves in some REITs, but feel quite pleased with the returns achieved by trading this market and capturing significant dividends in the process.
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