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Cohen & Steers Reit and Preferr Message Board

  • jandkgrav jandkgrav Mar 9, 2009 7:09 PM Flag

    Where is RNP going?

    I have dollar cost averaged my thousands of RNP shares down to about $5 per share. I am looking for opinions as to where you think it is going from here... much lower than $3 or much higher eventually?

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    • On the 11th of March I said RNP was in violation of the 1940 Act. And on the 27th, RNP reduced leverage to come into compliance prior to paying the dividend.

      Now the interesting question is can RNP continue paying the current dividend with reduced leverage?

    • I think you need to look at the underlying holdings e.g. simon property group which recently issued 15,000,000 common shares to pay down debt. where simon goes, 3.4% of RNP goes.

      • 1 Reply to dfm12dc
      • SPG ability to raise over $1 billion in the market is a good sign. The $500 million equity raised at $31.50 was immediately in the money for the buyers last week and even more so this week. Not very happy about the 10.75% paid for debt.

        Still with over $40 billion of real estate ($19 billion with no debt), over a billion in cash on the balance sheet and over a billion in free cash flow every year SPG is very well positioned in a very bad sector of the economy.

        Now the government if going to help revive the CMBS market and that should help as well. Given the rally in REITs other capital raises should follow. This dilutes the share count reducing the upside for RNP BUT also reducing the downside due to lower leverage.

        Barring double digit declines in NOI for multiple years the REITS held by RNP are NOT GOING OUT OF BUSINESS.

        The perfect average down stock. If you want even more income than the current dividend sell way out of the money calls on IYR and you will either keep the premium or have a good capital gain on RNP.

        Be patient and profit.

    • Insiders are buying.......So they must know something!

    • It is way oversold......with current price you get 30% return on dividend. If you think recession will be over by 2010, then this is the time to buy! Stock market usually start to move up six months prior to recover.

    • First, RNP is leveraged. Go to, click through to RNP and they show it leveraged @ 34%, which is about what it's always been. They may not be using ARPS, but they are leveraged.

      Second, I think they are going to cut their divy again because NAV has continued to deteriorate over the past 3 mos and they are on record that any divy will now be paid out of NII which is tied to NAV. The can't play the ROC trick any more, they're running out of NAV.

      Finally, RNP has dropped faster than comparable unleveraged CRE ETFs all the way down. CRE is still dropping. 3 to 6 mos from now the fund could stop paying a divy and its NAV could be minimal.

      Conclusion: I would not add until CRE is headed back up. Or I might get out if it looked like CRE wasn't going to head back up and get in at a cheaper level. If they announce a divy cut, and I think they will, I expect the price to drop.

      • 1 Reply to dclewis12002
      • What is you basis for your interpretation? At
        today's NAV of $4.96 and 48,000,000 shares outstanding we have a $250,000,000 fund. When
        the $ .2375 is paid March 31st go to C&H website and see how much is Net Investment Income and how much is ROC? From past months
        the total NII was close to $ .24. And on $250,000,000 NII is not lost and must be distributed according to perspectus. How do you get to zero?

    • The 1940 Act requires RNP maintain a 2:1 coverage of assets to preferred equity. The best I can make out, at $4.55 NAV, RNP is in violation of this requirement.

      Take the preferred equity from the last quarterly report, subtract out preferred share equity redeemed during the last quarter. This gives the current preferred equity. Assets must be two times the value of preferred equity.

    • I wouldn't put more into this. Commercial real estate has yet to bottom as balloon mortgages come due and no one will be willing to refinance even the performing assets. Meanwhile RNP is a leveraged fund. Could go to zero as it sells assets that are trading below book value to meet terms on leverage. A year ago that would have sounded impossible. But in this new world, who knows.

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