LANDM - Gladstone Land Series C Preferred: Sustaining Pari Passu Arbitrage With A 25% Upside To Call

2024-02-14 04:25:53 ET

Summary

• We identify mREIT and equity REIT preferred stocks with yield spreads 300 to 500 basis points above 10 Y Treasuries.
• Gladstone Land Corporation 6.00% Cumulative Redeemable Preferred offers a higher yield and tax advantages compared to Gladstone Land Corporation 6.00% Cumulative Redeemable Preferred.
• Investors can consider swapping LANDO for LANDP to improve carrying yield and capital appreciation potential. LANDP is also available at a steep discount to par.

Optimizing the fixed income portion of portfolios amidst the market roller coaster of 10 Y Treasury yields has become an endurance sport. When 3.80% arrives on the heels of benign CPI/PPI reports and then shoots to 4.16% after the release of stronger than expected employment data, you have to be fit and agile in response to those directional extremes. As a cushion to that volatility, we have identified and monitored the market action for more than 150 mREIT and equity REIT preferred stocks that offer yield spreads 300 to 500 basis points above 10 Y Treasuries. Within those preferreds, we often witness some pricing anomalies that an agile trader might exploit to improve yield and capital appreciation potential. Today's examples are the Gladstone Land 6.00% Series B ( LANDO ) and Series C ( LANDP ) preferreds....

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