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JDN Realty Corporation (JDN) Message Board

  • erichplace erichplace May 24, 2000 12:41 PM Flag

    cost of interest rate increase

    Currently most of the debt which was refinanced
    is at about LIBOR + 1%, an additional 1.5% increase
    on $150M would be about $2.25M per year, less on the
    income statement because some of it is capitalized.
    Plus, the properties being sold should reduce debt
    outstanding.

    Wal-Mart and Lowes are willing to settle
    for $5M a piece, they account for about 30% of annual
    base rent, doesn't that bode well for the cost of
    satisfying other tenants?

    A bit of a hit but small
    relative to the hit the stock has taken, what am I
    missing?

    SortNewest  |  Oldest  |  Most Replied Expand all replies
    • None are so deaf as those who will not hear.

    • YOur guess is as goood as mine in this one an the
      timing of a deal, but here is another high yielder,
      though not a preferred. If you want to see undervalued
      high dividend paying shares, look at ARLP. It's a coal
      master limited partnership that pays a big dividend and
      will likely raise it to $2.10 a share by the end of
      next year. Remember, these type of investments have
      K1s and pass through losses to partners so they
      generally pay more in dividends than they "earn" on a
      taxable basis. That means part of the dividend is retrun
      of capital. Best of Luck.

    • Seems like the preferreds are in a more vunerable
      position than I ever thought. You'd think that in order to
      attract buyers that they would require that they be more
      readily redeemed upon a merger or other out of the
      ordinary type event, etc. I love this preferred and feel
      really secure and good about it but guess that what you
      are saying is that (interest rate issues aside) they
      (preferreds) or it should always trade for slightly less than
      their redemption value because of the types of risks
      they are subject to as in the case of WDN? In the case
      of JDN the preferred will probably be fairly valued
      considering this type of risk when it reaches the $23 range.

    • JDN would most likely not be a private buyout,
      but bought by a KIMCO type or another public company
      that have a similar business model.Despite problems,
      JDN mgrs (that still own a lot of stock and cpntrol
      the board) were and are very financially conservative
      folks.. Unlike WDN, JDN insiders have not used company
      money to buy the stock when depressed.Finally the WDN
      preferreds were given a good deal -I bought a bunch when the
      preferred collapsed.

    • The only rights that a preferred holder has is a
      dividend preference to the common holder or any security
      of lower preference and in the case of liquidation,
      that if there is enough money, you get par value
      (usually 25 on a REIT preferred)before the common holder
      gets a dime. You have no vote on change of control
      usually. There may be some restrictons on the company with
      regard to placing more preferred with senior dividend
      rights to an outstanding issue. In the case of WDN, even
      after the lawsuit, preferred holders opted to take less
      than par since they knew their position was weak. PS.
      after the deal was originally announced, I bought
      preferred figuring that 25 in five years on a stock trading
      at 17.5 (which is where it was trading at the time,
      while collecting at $2.38 dividend (I think this is the
      amount)was a good risk. The market told me otherwise selling
      it down to 15 quickly, only to recover after the
      settlement of the class action. By the way, if a buyer does
      appear, there is already a precedent for not paying par
      value for the preferred stock on a REIT. Still, 18 is
      relatively safe, but not likely to have as safe an upside as
      the common. The die is cast for this stock to
      disappear. Buffett has positions in a number of other REITS
      as well. He or another financial investor will marry
      this portfolio of good properties with a strong
      management team soon!

    • So it was after a lawsuit that the preferreds
      took a hair cut by way of settlement? While I
      understand that in a sale they may have to tag along what
      you are saying is they fought the sale and as a
      result of litigation took less than face value as
      opposed to being taken along. Do the preferreds have no
      rights to reject a sale or minimum capital requirements
      behind them, etc?

    • Safety of preferred dividends should not bet the
      real question here. It is the safety of principal.
      Look at Walden Residential, symbol was WDN. It may not
      come up now because they were bought out, but you can
      check in Edgar. The problem was that while the common
      shareholders got $23.12 a share, the preferred holders of
      which there were two series, got less than face value,
      and then only after a lawsuit which gave them a
      $22/share payoff on $25 dollar preferred. Otherwise they
      would have been left with a preferred on a very
      leveraged company or a nonpublically traded stock which
      would have paid off in 5 years. So common is actually a
      more certain bet in all but a liquidation. If these
      guys sell, I'll bet the number is 15-19 a share, no
      higher, but not a bad return in 12-18 months. That's my
      prediction.

    • he has nothing to say and takes a long time to say it.

    • Was trying to help erichplace answer his
      interesting question....his question had nothing to do with
      safety. Wasn't trying to find the answer to the kind of
      questions you are trying to answer. By the way with a tape
      measure I probably could tell you how long the string
      is.....

      Good luck to you also.

    • To ask the question, "how safe is JDN pfd?" Is
      similar to asking the question, "How long is a piece of
      string?" Unaswerable.

      In JDN's current condition,
      no one can answer your question.

      Questions of
      safety depend on information and transparency, neither
      of which is available now.

      To try to invest
      in these muddied waters is in fact to
      speculate.

      No charge, good luck!

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