Thanks, Leyla. It seems similar to me in the public REIT space (and some other sectors). The preferreds are so often a tiny slice in the overall capital stack, so they are not well protected in bankruptcy. Plus, despite seemingly protective "change of control" language, there are a few ways an acquirer can benefit by screwing the preferr…
Thanks, Leyla. It seems similar to me in the public REIT space (and some other sectors). The preferreds are so often a tiny slice in the overall capital stack, so they are not well protected in bankruptcy. Plus, despite seemingly protective "change of control" language, there are a few ways an acquirer can benefit by screwing the preferred holders. But try telling that to a retail investor with stars in their eyes about the high yield. Sigh.
I just heard of a deal where preferred equity was getting $.40 on each dollar invested after the short sale. It's really mind-boggling how semantics convince people this position is somehow "safe"..
Thanks, Leyla. It seems similar to me in the public REIT space (and some other sectors). The preferreds are so often a tiny slice in the overall capital stack, so they are not well protected in bankruptcy. Plus, despite seemingly protective "change of control" language, there are a few ways an acquirer can benefit by screwing the preferred holders. But try telling that to a retail investor with stars in their eyes about the high yield. Sigh.
I just heard of a deal where preferred equity was getting $.40 on each dollar invested after the short sale. It's really mind-boggling how semantics convince people this position is somehow "safe"..