Written by Nick Ackerman, co-produced by Stanford Chemist
Cohen & Steers Quality Income Realty Fund (RQI) and Cohen & Steers REIT and Preferred and Income Fund (RNP) are both focused on investments in the REIT space. REITs have been under significant pressure since COVID-19 has wreaked havoc on the world. This is for good reason too, as many REITs that are linked to the retail, lodging and office will see reduced rent payments over at least the shorter term. Perhaps even longer-term these areas will struggle too. Even apartment REITs might be under pressure in the shorter-term as well, as individuals will struggle to pay rent. Thus, reducing cash flow to the REIT itself - which would then be passed onto RQI and RNP. However, the majority of these two REITs portfolios aren't heavily invested in those areas.
This could help explain why we are seeing some massive discounts on these funds. For example, RQI had a discount of 14.51% just weeks ago. Now, the fund has rocketed higher. This substantially reduced the funds discount to the current 7.28%. While the fund's 5-year average discount at 7.61%. For RNP, we had a discount of 15.29% weeks ago. While the 5-year average for that fund comes in at 10.83%. The current discount for this fund has contracted too in the last several weeks to the current 10.77%. I believe these funds are certainly worth a look in these extreme times. This would generally be a great time to buy, especially for RNP. RQI could still reward a long-term shareholder, even at these levels though. Even the portion of the portfolios that do touch the 'untouchable' REIT segments at this time has further protections in their portfolios. That's because these funds hold preferred and bond securities, in addition to equity positions. This is especially true for RNP with half of its portfolio designated as fixed-income. This does mean RQI is more of an aggressive bid with
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