Part I: How To Evaluate Preferred Stocks Like A Pro Starting With This Attractive 8% Yield

Objective
The purpose of this article is twofold: (1) share a summary of an educational piece I wrote for Institutional Income Plus subscribers on the key aspects of evaluating preferred shares and (2) demonstrate the process on an actual issuance that I own and currently recommend. While detailed, this overview will not and cannot encompass every possible situation as preferreds can be underwritten with an effectively unlimited range of characteristics. I will be following up shortly with two additional preferred share recommendations. Remember: understanding what makes a stock/opportunity attractive is more valuable than a single recommendation. Today, you receive both! Thank you for reading.
The Company

Jernigan Capital (JCAP) is a commercial mortgage REIT combined with a self-storage REIT. The firm provides debt and equity to the developers of self-storage facilities. Management would prefer JCAP be considered an equity REIT. My sneaking suspicion, however, is management really prefers the equity multiple of an equity REIT. These are two businesses within the real estate sector that have experienced strong momentum in recent years. Self-storage has been the top performing sector in total return since 1994. Those in its peer group include the likes of Blackstone Mortgage Trust Inc. (BXMT), Colony Credit Real Estate Inc. (CLNC), Ladder Capital Corp. (LDR), Granite Point Mortgage Trust (GPMT), and Starwood (STWD) on the commercial mortgage REIT side and Global Self... Read more