I am not a preferred guy. In the world of reit preferreds I function from the simple concept that as long as the common dividend is maintained the prfd will trade in the market along with interest rates.
When the common dividend gets cut or eliminated the prfd will trade at lower levels to accomodate the new risk (perceived or real) that the prfd dividend may be stopped. FCH would be a recent case where the common dividend is stopped and the threat to the prfds became a reality when it was disclosed that the banks have the authority to demand that FCH stop prfd payments.
In PGE's case there is a serious question about the overall valuation of the common. Until you resolve what form of recapitalization or other strategic option is exercised you have no clue what the prfd is worth.
As far as indebtedness goes I do not discount it because for those in the know we have seen the direct impact of such refinancings in the case of VTR. PGE cannot do those refinancings w/o a change in corporate structure. That change will come at a price to common holders to be sure. To prfd holders??? Who knows until the deed is done.
CHI is a very diverse marketplace. Someone has to explain to me why so much space is coming on board at this time. 4.2M is a lot of space. Was it a mistake related to the bubble economy? Was it the belief that Boeing was going to be a major player needing support businesses proximate to them in the CHI CBD as it was in Washington state? Was it pure speculation? Was it because older buildings labeled as Class A really are not because they need major renovations that are not forthcoming that would prove too costly?
I think its a little of both. But when you hear that BOS market is expected to start recovery in 06 and realize that BOS and CHI are bringing on so much more space than any other city and rents in CHI are not yet at the bottom it is no stretch to conclude that the CHI CBD will also lag any national recovery.
I got a report today indicating that the PHIL suburban and CBD are seeing and expecting more vacancies in 03 w/recovery in 05.
The key is that PGE is no position to save itself so all that is being waited for is what the price is and who will pay that price; clearly the common. And yes I do believe PGE is more or less being priced for what some believe the common will end up with after the capital restructuring or other event that lifts PGE out of its mess.