![]() The Consolidated Schedule of Investments includes positions of the Fund and the REIT Subsidiary. Investments in the REIT Subsidiary are limited to 25% of the Fund’s total assets. Unlike the Fund, the REIT Subsidiary may invest without limitation in private real estate. The REIT Subsidiary may use wholly-owned, limited liability companies to contain the exposure of individual private real estate investments. The Fund expects that it will achieve a significant portion of its exposure to private real estate investments through investment in the REIT Subsidiary. The REIT Subsidiary acts as an investment vehicle for the Fund in order to effect certain investments on behalf of the Fund, consistent with the Fund’s investment objectives and policies. The reason for this subsidiary is to seemingly invest in private real estate that RNP couldn't necessarily invest in themselves.Ĭohen & Steers RNP Trust (the REIT Subsidiary), is a wholly-owned subsidiary of the Fund organized under the laws of the state of Maryland as a statutory trust on Jthat commenced operations on November 30, 2021. However, for the REIT subsidiary, perhaps this is the going rate for now. This is well above and beyond anything that we've seen in terms of financing costs for CEFs, even with rising rates. Certainly nothing material, but the 12% yield certainly means someone is getting a sweet deal. It was a private placement of 125 shares that resulted in gross proceeds of $125k. BLUE LETTER K 3D RENDERD SERIESIt still represents that the majority of the leverage won't see higher expenses for several years yet.Īdditionally, the fund's wholly-owned subsidiary issued Series A Cumulative Preferred Stock on January 27th, 2022. That still isn't an overly meaningful impact at this time. The fixed-rate portion declined from 85% of the borrowings previously to touch down at 81%. RNP is a fund that relies on a credit facility, but most of its borrowings are locked in at a fixed-rate due to interest rate swaps and fixed-rate borrowings. Some funds are more susceptible to the downside of higher interest rates due to their holdings or the type of leverage they carry. At this time, it still isn't at an alarming level despite a nearly 27% drop from the last time we covered the fund. That's according to their latest semi-report from the previous annual report. It is from the depreciation in the underlying portfolio, but they've also even increased borrowings by another $25 million to $450 million. Leverage has been inching up for this fund. Interestingly, that is down from the 1.78% we saw reported at the end of fiscal 2021. The total expense ratio comes to 1.76% when including the leverage expenses. That is around the average for closed-end funds. Most of the portfolio has been held in the U.S. RNP's objective is "high current income" and a secondary objective of "capital appreciation." To achieve this, they invest just as their name would suggest "investment in real estate and diversified preferred securities." They will invest in both U.S. This is especially true for higher-quality funds, which I believe RNP is. When the discounts are widening is generally when solid returns can be made. Still, that's where opportunity can open up in these volatile times for closed-end funds. The leverage in this fund is also playing a role too, making it a more volatile play. BLUE LETTER K 3D RENDERD UPDATERNP Performance Since Previous Update (Seeking Alpha) The S&P 500 isn't an appropriate benchmark, but it can provide us with some context of how this fund is performing. That would be including the distributions the fund has paid out. Since our previous update, RNP has performed similarly to the broader market on a total return basis. REITs themselves are down, so a discount for RNP could be seen as even more attractive. Though the discount has been quite volatile, as we often experience in times when the overall market is volatile for closed-end funds. A version of this article was originally published to members of the CEF/ETF Income Laboratory on September 26th, 2022.Ĭohen & Steers REIT & Preferred & Income Fund ( NYSE: RNP ) had recently touched up to an attractive discount. Written by Nick Ackerman, co-produced by Stanford Chemist. ![]()
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