No. of Recommendations: 1
joelcorley writes about the safety of UBP-D:
I would beg to differ. UBP is a very small REIT with a market cap of about $160M. The common has only traded 2 blocks in the past 5 days. UBP-D has only 1M shares outstanding.

Joel, you should do a little more research before you oppose someone's
recommendation. UBP has a class A common stock, UBA, which gets all the trading. It trades 90,000 shares per day on average. The market cap of UBP is $650 million, not $160 million, and there are 2.45 million shares of UBP-D outstanding according to the latest 10Q, not 1 million.

Sure, UBP is not big, but why should that concern me? Bear Stearns, GM, AIG, Citigroup and Lehman Brothers were big. UBP is a very conservative REIT, in the safe shopping center segment, with good locations and a very good balance sheet. And on top of that, the preferred stocks makes up 44% of the company's liabilities so there is not a lot of debt in front of the preferred in the company's structure. That is what matters, not the size.

its price could drop drastically if someone has a sizable holding and decides they have to liquidate RIGHT NOW

If because of it's size, a large sell knocks the price down 5%, that is a positive - a great buying opportunity that I would not ever get in a large cap stock. Illiquid stocks make for the best trading vehicles. I've followed this stock for years and, unfortunately, I have never seen that kind of inter-day volatility except during the crash when everything was getting killed.

But REIT and preferred prices can drop drastically - as most did during the real estate / credit crisis of '08 & '09.

Yes, but UBP went from 18 to 13, much less of a drop than the S&P 500 despite its small size. So I don't concern myself with size, only credit risk. And since the discussion was about alternatives to covered call strategies, I maintain that 30% leverage on UBP-D (which gets you around a 9.5% yield) is much safer than any covered call strategy that might get you 9.5% at best. If you had done a covered call strategy on RIG (which was mentioned in the original post) in 2008, a lot of good that income from the $3 call option would have done as the stock went from $150 to $50.
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