A Weird Perpetual Preferred Equity: 3% LTV That Yields 11%

The preferred is covered 30x over. The market is pricing something else entirely.

Here’s an interesting situation a reader flagged in my DMs. A perpetual preferred with a 3% LTV, more than 2x dividend coverage, and a cash yield around 11%. On those metrics, it’s a no-brainer. For context, CCC paper trades around 12%. This thing yields 11% with nothing ahead of it.

Numbers like that usually mean one of two things: the market is missing something, or the calculation is hiding something. In this case it’s a third thing, and it’s more interesting than either.

One housekeeping note. The security is exchange-listed but thinly traded, so this is mainly a PA trade idea. Because the situation is sensitive to size, I’m putting this one behind the paywall early. I’ll open it up in a few weeks.