I would say nos. 3, 4 and 5 are all effecting RQI. This is a closed end fund and not that many shares are trading despite manic activity in the markets at large.
Longtime holders who are more patient? Also, watch early in session moves in this. It doesn't close strong, but I don't buy REITs or closed end for their closing strength. Some do and likely are the ones bailing.
Discount has been cut by almost 1/2 from Friday (10/10/08). So there is still a bit of an excess discount available. In good times, RQI has traded at a premium, but the world is different today. Factors of concern are: 1) Market Shorts. 2) Meaningless rearranging of the Balance Sheet in the exchange of ARPS for Bank of America Debt. Makes the Balance Sheet look ugly, but decreasing the cost of money is truly positive. 3) Some REIT holdings may have liquidity issues, the TARP move today (10/14/08) should lessen that concern. 4) Current RQI owners suffering Post Tramatic Stress from the beatings and abuse received over the last two weeks by the Market. 5) Market fears.
The NAV on last friday was $8.75, while the closing price was on Friday $5.38. The discount was 38.51%, which, in my opinion, was huge. Today, Record-Monday, RQI traded up 39.78% while the top 10 holdings from 6/30/08 only traded up 3.87%.
So, to me, this means the Friday's 38.5% discount is about gone. You can check tomorrow on:
The questions are: Will the discount reappear? Did all the shorts cover today? Will the shorts be fighting for their turn tomorrow? Will BA's LOC be implimented on the anticipated favorable terms on October 9-21, 2008? Will sometime else happen?
Remember RQI closed at $13.11 just two weeks ago. Please, any other thoughts?
The possible bankruptcy of General Growth in late November is hanging over the REIT market.
Also, more specifically to RQI, it is now obvious that bailing out half the institutional preferred shareholders at par when other preferred shares are trading at huge discounts is pretty much the equivalent of telling the common shareholders "drop dead". In addition, they are probably having to sell some of their REIT shares at rock bottom prices to raise cash to buy back those preferreds.
This raises questions about the basic competency and even honesty of the people who run this fund. Maybe back when they decided on this preferred buy-back things weren't so bad, but why lock yourself into something like that in an environment like this, why not just tell the preferred, "hey we'll take care of you when things turn around, sorry."