This preferred stock is issued by a shopping center REIT.
Ramco-Gershenson Properties Trust PERP PFD-D CV (RPT-PD)
From Sound Advice
RPT Realty 7.25% Series D Cumulative Convertible Perpetual Preferred (RPT-PD) is a convertible preferred stock, convertible into 3.6711 shares of the common stock (RPT). The conversion value of the common stock is close to the price of the preferred stock, which gives the preferred stock nearly the same upside as the common stock. The annual dividend is $3.62.
The value of RPT’s real estate portfolio is $2.45 billion. Adding the company’s other assets and subtracting its liabilities leaves an equity of $19.48 per common share (RPT). Currently RPT is trading at a 25.6% discount to that value.
RPT Realty is a real estate investment trust (REIT) currently owning 49 shopping centers across the eastern US, consisting of town center, urban-infill neighborhoods, and power center properties with national chain store tenants, market-leading supermarket tenants, as well as
a strong lineup of smaller national retailers. Centers also include entertainment components, including theaters, fitness centers, and restaurants.
Although the company has been operating for 60+ years, it is under new management. Its name was changed one year ago, from Ramco-Gershenson Properties Trust, after the departure of Dennis Gershenson, who served as the company’s President, CEO, and Chairman of the Board. The company’s culture and business objectives have changed since new management took over. The new CEO, Brian Harper, and his new executive team is repositioning the company’s portfolio of shopping centers by selling off those which are not scalable, or in less desirable locations, while expanding those in the best locations.
The company is also modernizing its shopping centers by seeking retailers that successfully meld on-line services in concert with brick-and-mortar locations, offering online sales with options to pick up in the store. Most retailers, both small and large (such as Amazon groceries) are finding they need an on-line presence with delivery options from a nearby retail location. The new strategy is also aimed at securing more tenants that will drive visits to the center several times a week, such as fitness centers including Equinox and SoulCycle, salons including Sephora and Ulta, as well as restaurants and movie theaters.
Unlike most preferred stocks, RPT Realty 7.25% Series D Cumulative Convertible Perpetual Preferred does not have a call feature, which is why they are “Perpetual.” Each share has a “liquidation preference” of $50 per share in the event the company is liquidated due to bankruptcy, but that preference does not allow the company to call (redeem) the preferred shares. However, the company does have the right to convert the preferred shares into common shares if the common stock rises above 130% of the conversion price, which means the common stock would have to rise above $17.28 per share. At that price, the conversion value would raise the price of the preferred above $65. In the event such a conversion took place, a decision could be made at that time whether to keep the common stock or not.
Its ticker symbol varies depending on the device you are using or the brokerage service. It is often quoted as RPT.PD, but on the iPhone it is RPT’D, and Fidelity uses RPTPRD. In any case, this is the only RPT preferred stock for RPT Realty.
Gray Cardiff, Sound Advice, www.soundadvice-newsletter.com, 800-825-7007, December 2, 2019