Skip to main content
No. of Recommendations: 1

You wrote, The preferred UBP-D is very safe ...

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. There is no liquidity to it either. Its seems to generate more transactions. But today's volume was a whopping 763 shares ... meaning its price could drop drastically if someone has a sizable holding and decides they have to liquidate RIGHT NOW. (Or if their broker exercises a margin call and sells a large block at market.)

Also, ...or use 100% margin and create a 14% yield. I am currently 100% leveraged on UBP-D.

Its true that REITs typically have hard assets underlying them, which should support a price floor. A reliable income stream would also help support a price - assuming comparable yields remain relatively unchanged. But REIT and preferred prices can drop drastically - as most did during the real estate / credit crisis of '08 & '09. This much leverage would likely wipe out your holdings if there were any serious negative news... I would argue that this is not "safe" by any definition. Bold? Yes. Safe? Hardly.

- Joel
Print the post  


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.