If you look back over some of last year's posts, you'll find plenty on this Walden topic.
Basically, the LBO firm, Hicks, Muse, came along to buy out another apt. REIT, Walden Properties, and their deal essentially tried to screw the preferred shareholders. Walden management went along and endorsed this, to essentially get a better deal for the common shareholders(which , of course, included themselves - they owned no preferred shares). Under their deal, the pfd. shares would have essentially become non-public and the new owners would be free to leverage the heck out of the assets,. and probably even quit paying the dividends without much repercussion. It appeared that there was a real flaw inherent in preferred stocks, one that no one had focused on before. Seems like, at least in Walden's case, pfd. shareholders were viewed more like bankers than shareholders, and no one seemed to care really how pfd. shareholders fared.
They almost pulled it off, before a class-action suit dissuaded them. Naturally, when and while this matter was pending, preferred shares in all REITs dropped dramatically, as investors feared that such aggressive(and apparentlyu legal) strategies could be used against them and their preferred shares - still a concern, but apparently sleeping for now. Even after this matter resolved favorably(whew!), the pfds. languished for months under that cloud, only really recovering this year, as new investors, escaping the NAZ, etc., have come in and pushed these stocks higher, looking for yield, and not knowing or caring about much else.
This is still the big, ugly secret about preferred stocks, IMO. There is still a possibility this comes back again. Even the --IMO -- honest management at MAA can't (or even care that much) necessarily) protect us from it. (They say, essentially, talk to a securities lawyer and buyer beware!) It is probably good to own some common shares to hedge your preferred shares to hedge that risk. I own a 50/50 mix.
For me the trouble is that most, if not all, of the upside is out of these at these levels - and of course, there is always downside risk --otherwise I wouldn't have been able to pick these up around $17 last year, after the last downside surprise(the Walden scare).
A good hold here if you bought lower and locked in a high yield - - but a good buy now? Not much margin of safety.....as Ben Graham or Buffett would say.