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No. of Recommendations: 1
tiberko,

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
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