Skip to main content
No. of Recommendations: 5
Regarding the comparison to QTS-A, with the A series you have a guaranteed capital loss. If rates and credit quality stay constant, some day it will be called at $25 and you lose a little on the price. If rates rise or company deteriorates, the A (and the B) will go down and you lose that way. With the B, while you have a lower current yield, you have unlimited capital gain potential and only a little more downside risk than the A. QTS common is up 11 points year to date. It's a fast-growing data-center REIT. Wells Fargo estimates 3 - 5 year growth rate of 12%



I have an allocation to REIT preferreds that I promise myself to keep filled. I've gotten bounced out of Well-I by forced conversion (with an 18% capital gain and years of dividends). I have very nice capital gains in my ARE-D, EPR-C and EPR-E convertible preferreds and I won't be able to keep them forever either, if all goes well. So, I'm very glad to have a new convertible to add to my portfolio. They don't come along all that often. I buy very large positions in them when they do, because I can do so within my risk-tolerance limits, and they have treated me well. My favorite, from long ago, was CNT-B. CNT was a gazelle REIT I would not have bought in quantity through the common. But I was able to take a large position within my risk-tolerance zone through the convertible preferred (which I learned about through this board) and it gave me a very nice ride.

I gladly give up a point of yield and have the potential for double-digit capital gain. My capital gain in ARE-D is 33%, in EPR-C it's 31%, in EPR-E it's 24%. I forget the magnitude of my gain on CNT-B, but it was big. So, I like convertible preferreds. I like even busted convertibles, because of their lack of a call option for the issuer, and will accept a lower yield to get them.
Print the post  

Announcements

What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.