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American Finance Trust: A Good Result Makes The Preferred Shares Safer


  • 2020 was a difficult year for almost every REIT, but American Finance Trust performed rather well.
  • The REIT issued a new class of preferred shares, which will increase the outflow related to preferred dividends to in excess of $20M.
  • Despite this, and even assuming the REIT's performance doesn't improve in 2021, the preferreds have a dividend coverage ratio exceeding 500%.
  • That being said, I will rotate my AFINP position into the new AFINO issue, as it simply makes more sense given the current share prices of both issues.
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American Finance Trust (AFIN) is a triple net REIT whose share price has increased by in excess of 50% since my September article. However, this article will discuss the preferred shares issued by American

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This article was written by

The Investment Doctor profile picture

The Investment Doctor is a financial writer, highlighting European small-caps with a 5-7 year investment horizon. He strongly believes a portfolio should consist of a mixture of dividend and growth stocks.

He is the leader of the investment group European Small Cap Ideas which offers exclusive access to actionable research on appealing Europe-focused investment opportunities not found elsewhere. The a focus is on high-quality ideas in the small-cap space, with emphasis on capital gains and dividend income for continuous cash flow. Features include: two model portfolios - the European Small Cap Ideas portfolio and the European REIT Portfolio, weekly updates, educational content to learn more about the European investing opportunities, and an active chat room to discuss the latest developments of the portfolio holdings. Learn more.

Analyst’s Disclosure: I am/we are long AFINP. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

I have a long position in both AFINP and AFINO, but I will likely sell AFINP and rotate the proceeds into AFINO.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (16)

Interesting article, thanks. Either the common or pfd dividends qualified?
The Investment Doctor profile picture
@AlieGee I honestly wouldn't know, I'm not an American. Perhaps someone else can provide you with an answer. Sorry!
Catmanrog profile picture
@The Investment Doctor @AlieGee
My AFINP dividends were non-qualified. I hold position (now AFINO) in Roth IRA.
@Catmanrog Thanks
Catmanrog profile picture
Much appreciated heads up on this AFINP to AFINO switch ! Made enough in transition to allow an increase in shares bought, thus increasing my quarterly dividend income.
Best Regards, Rog 🐾
The Investment Doctor profile picture
@Catmanrog Same here, even after taking transaction fees and taxes into account, I was able to purchase more AFINO (thereby very slightly increasing my income) while also taking 1.5% of the AFINP investment out in cash, sitting on the sidelines for now.

Perfect example of an inefficient market, I think.
airlarr profile picture
Well written report. Thank you.
fivekhigh13 profile picture
Thanks, for pointing out the misprice, totally agree with your recommendation , sold AFINP and bought more AFINO
The Investment Doctor profile picture
@fivekhigh13 Glad you found the article useful!

I completed my switch today. I'm now fully out of AFINP and rolled the proceeds into AFINO.
My understanding is that the dividends have been suspended on both the common and preferred shares?
The Investment Doctor profile picture
@bonddoc I think you must be confused with another company.

Preferred stock dividend announcement on March 26: ir.americanfinancetrust.com/...

Common stock dividend announcement on April 1st (not an April's fool joke, I swear) : www.prnewswire.com/...
jlmathis69 profile picture
@bonddoc They changed from monthly to quarterly dividends, did not suspend.
Eileen Dover profile picture
@jlmathis69 You will notice they switched to qtr but went 4 months in the switch so they stole a month's payout !!
Thanks for the article - AFINO is ridiculously mispriced right now. I traded my AFINP shares to AFINO last week.
The Investment Doctor profile picture
@ibid6677 I kept on thinking I was missing something, but nope. Anyone who believes in the efficient market theory should have a look at AFINP/AFINO and throw their theory out the window.
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