What's the inherent difference between preferred equity and mezzanine debt (in the particular case of KTR)? I would say very little.
If I could lend damn safe mezzanine money at 9.0%, that's like taking candy from a baby when you consider the 10 year treasury is 3.6%. I'll take a spread of 540bps to effectively be lending not more than about 65% LTV.
I bought PPS, TCO and GRT preferred on this basis and all have appreciated in price by about 10%. You'll never see a REIT preferred double in price but if you buy a good brand with a 9.0% div. yield it'll be pretty sure to improve to an 8.0% div. yield. That'll give you a 10% appreciation plus your 9% divvy. Don't be greedy, there's nothing wrong with 19% in this market.
Disclosure: I own the common, which I rode up from about 12.50.