Joe Eqcome

CEF Weekly Review: Real Estate Extends Gains

BCT's special distribution of $.531 per share will go to reduce the NAV and therefore will reduce the liquidating distribution by a like amount.

As a result, the current NAV is approximately what shareholders will likely get as a liquidating distribution--it just will come in two parts.

Joe Eqcome

CEF Weekly Review: Real Estate Extends Gains

Here' a hyperlink to the BCT press release mentioned above. It didn't see to take above.

www2.blackrock.com/web...

Joe Eqcome

CEF Weekly Review: Real Estate Extends Gains

Another BCT Update:

I received an e-mail on my website from "FM" regarding this BCT distribution. It was very helpful and posed some additional questions.

FM points to a press release on 6/3/09 from BCT regarding the distribution for BCT. In the press release, BCT states BCT will make its final liquidating distribution on or about October 30, 2009, as opposed to the end of 2009—as previously noted.

www2.blackrock.com/web...

The press release goes on to state, a special distribution in connection with the Trust's liquidation will be made to shareholders of record 10/15/09. This special distribution is for $.531949 per share.

FM points out with a flat price to discount, the special distribution would generate, and I quote, "about 5.3% for 1 month if you believe the NAV will stay flat. Could be better in NAV improves. Still not bad when you annualize."
This makes it a little more interesting.

I guess the threshold question with regards to the special distribution is: wouldn't such a distribution just lower the liquidating NAV by a similar amount? If so, in the final analysis, a shareholder might just be getting a $.53 per share distribution in a separate distribution.

The final liquidating distribution might be the pre-special distribution NAV less the special distribution? Assuming the NAV doesn’t change that much, the cumulative distribution would represent the current NAV or about $12.42 per share as of 9/18/09? Don’t know?

If the special liquidation distribution is separate and apart from liquidating NAV then this might be interesting as FM suggests.

Again, thanks FM for the "heads up".

Joe Eqcome

CEF Weekly Review: Real Estate Extends Gains

Follow Up on BCT

In a conversation with Blackrock with regards to BCT, its original objective was to liquidate the CEF at the original issue share price of $15 per share at the end of 2009. However, this was not a guarantee.

The trust will be liquidated now on or about October 30, 2009 at NAV--which is now approximately $12.42 per share.

Assuming you buy 200 shares of BCT at the prevailing price of $12.25 per share and pay a commission of $10 per share your average cost would be $12.30 per share. Assuming you get approximately $12.42 per share liquidation distribution, the liquidation payment would represent a $.12 per share increment over your embedded cost.

This would be a return on your money of less than 1% for the holding period of approximately a month and a week. However, the distribution would be a return of capital, i.e. you wouldn’t have to pay taxes on the increment distribution.

There are too many moving parts and a low projected return for this to be an interesting arbitrage. I’m sure there will be some liquidation costs that might reduce the liquidation distribution.

The stated objective of returning to investors their original IPO invested capital of $15 per share and then placing a caveat that they just might not seems a little misleading. A more accurate and honest objective would have been, "protection of the original shareholders' invested capital".

And they didn't even do that--let alone investors getting back their original $15 per share.

Yes, Virginia, it was too good to be true.

Joe Eqcome

CEF Weekly Review: Divergent Fund Types Discount Changes

The composition of the most recent distribution declared yesterday will not be available until it’s paid in September.

However, contrary to my expectations, according to PHK's Section 19 Notice, just released, the distribution paid in August reflected a lower return of capital component than the distribution paid in July: 14.6% versus 30.1%, respectively. The monthly distribution amount was the same: $.121875 per share.

Joe Eqcome

CEF Weekly Review: Divergent Fund Types Discount Changes

PHK Update:

PHK announce its regular monthy dividend of $.121875 per share, ex div, 8/13/09; record date, 8/13/09; payable 9/1/09.

Press Release 8/4/09 4:00 PM EDT finance.yahoo.com/news...

I'll be back with composition of dividend.

Joe Eqcome

CEF Weekly Review: Divergent Fund Types Discount Changes

Amorgano

With all due respect, you don’t appear to have a handle on the facts. Let’s parse your comments:

Comment: “The stock is trading as if the dividend is going to remain the same.....”

Response: There are only 6 CEFs out of my universe 486 CEFs that are currently trading at a distribution yield of over 16%. Half of those stocks are “option/arbitrage” CEFs where there is high degree of uncertainty regarding the distribution level due to the unpredictability option exercise. There are no high yielding CEFs like PHK in this group. As I’ve repeatedly pointed out, PHK’s peer group distribution yield is currently 9.3%. PHK's yield doesn't compute.

As an aside, there are only 3 CEFs out of 486 that are trading at a premium of over 30% versus PHK 57.3%. It’s much rarified air indeed.

Comment: “….NAV is moving up strongly….”

Response: PHK has actually lagged the CEF industry in terms of '09's NAV growth. PHK NAV is up 15.5% from year end vs 19.2% for the average NAV of 130 of the sector's largest CEFs. Yet its share price is up 63.3% YTD versus 27.4% for the CEF industry.

So, either you’re living in a parallel universe, or you’re making unsubstantiated claims.

I’m not I’m asking anyone to disprove the existence of Unicorns; all I’m asking is for empirical evidence for PHK’s valuation. Beyond, the “In Bill Gross we Trust”, I’m not getting a satisfactory response. So, until I do, I'll keep talking about how the numbers don't make sense.

The next time you make a comment like this, please substantiate it with data or don’t waste our time with this poppycock.

Joe Eqcome