Preferred Stocks: Quick Read
January 4, 2018 | Beth Glavosek | Blue Vault
Preferred stock shares have been around for a long time, but what are they and why are they relevant to investors in alternative investments?
- • Holders of preferred stocks have a higher claim on a company’s assets and earnings than common stock, including the payment of dividends
- • In a typical capital stack, preferred shares are considered higher risk than senior and subordinate debt on a company’s balance sheet, but less risky than common stock
- • Preferred stockholders usually don’t have voting rights
- • They have the potential to appreciate in price
- • They receive regular dividend payments from the issuing company
- • They’re paid a fixed or, in some cases, an adjustable rate dividend
Preferred stock shares can be traded on a public stock exchange. Call features and sinking fund provisions, if applicable, can affect pricing when shares are sold.
Several life cycle REIT sponsors are using preferred shares as a way of raising additional capital. In upcoming posts, we’ll take a look at how they’re using this particular method of fund raising.
Our thanks to Bluerock for contributing material to this article.
Learn more about Bluerock Real Estate on the Blue Vault Sponsor Focus page.
I have been using Blue Vault Partners for the past five years. I have found them to be a valuable, unbiased resource when it comes to evaluating and comparing non-traded REITs. The reports help me analyze which sponsors are doing a responsible job of managing their offerings. This allows me to limit my REIT recommendations to only the most competitive products, and then track those REITs throughout their life cycle.