Did some rough calculations on RNP ability to pay dividend based upon 9/30/2008 holdings. Cash & Equivalents $50,671,733 October 2008 T-Bills $83,500,000 Total Avail to Pay Dividend $134,171,733 Estimated monthly Dividends $18,500,000 Above says RNP has 7.25 months of dividend cash (or T-Bills) on hand without fire sale of single asset. Obviously this surplus of dividend greatly enhanced with monthly income from holdings. Although disappointed with NAV and Share market price gives me a lot of confidence in RNP ability to keep my dividends coming. Please let me know if my crummy analysis way off the mark and why should I be worrying? Thanks in advance to the group.
After C&S announced the redemption of AMPS I called IR to confirm what I suspected. They were forced to sell assets when the debt went over 50% of NAV. They will eventually lower the dividend to reflect lower income from fewer assets.
Same is true for other C&S funds with AMPS leverage remaining on books.
This happened with FFC which had to reduce dividend modestly.At prices below 9 even with a 10% cut you wouldstill be getting 20%- lets face it these sold down because reits are not going to do great in a recession- the question is whether the selloff discounts the downside and I have been buying utf,rtu and rnp.All have run up- so I will wait for a pullback.Best place to find bear market bargains is in former highfliers like reits.RRW
Where did you get those cash on hand figures?Looks to me from yahoo and the most recent filings like they have about 9$ mil on hand.They borrowed Around a billion and a half to buy 55% of the AMPS which reduced leverage.Note they say they arent brtinging in enough to cover the dividends right now,and amight be using capital gains mixed in with to the div.
I agree about the shape of RNP. It is good to remember that RNP holds dividend paying common and preferred shares. This has not changed during this volatility. And, by law, RNP must pay out 90% of it's gross income less expenses i.e. net income. REITs are different in this respect as to other high yield CEFs who can cut their dividend anytime.
I hope you're right but another closed end fund I own NCV just said last night they may have to cancel dividend payment this month. Check their reason and see if it might apply to RNP as well. This market is getting so scary it ain't like anything I've ever seen.
I don't know enough about the reserve requirements for RNP. If they have the same 200% reserve requirement they may be of concern. OTOH, they were early to redeam their AMPS and to institute a program change to their dividend policy which may keep the dividend level even though its source is modified. Any other insight would be appreciated.