HTIA IPO’d on 12/5/19, has a coupon rate of 7.375% and doesn’t appear to have any credit ratings. HTIA Search Results - QuantumOnline.com Considering that other fixed rate preferred stocks issued at the same time (including one from the now failed First Republic Bank, issued 11/25/19) had coupons in the 4.7% - 5.25%, it appears that it was a junk preferred from the beginning, and if the price has dropped because of the increases in interest rates, it’s probably still a junk preferred. If you knew that going in, and were willing to take that risk, that’s okay. If you didn’t understand that, and bought HTIA because of the yield without understanding the risk, I would suggest that you might want to change your processes for picking stocks.
When research preferred stocks, I use www.quantumonline.com a lot. (The link above is the page for HTIA from that site.)
If you are looking for analysis from others, www.seekingalpha.com can be an interesting source, although separating the wheat from the chaff on that site can be a challenge. I haven’t really looked at it, but here’s the most recent article on HTIA from Seeking Alpha Preferred Arbitrage With HTIA (NASDAQ:HTIA) | Seeking Alpha
And there’s always the financial filings for the common stock. Here’s part of the management discussion from the 2022 10-K http://ba311dbe0c33a47664ae-f51abaa5af2ec1c9a8ff4866ef8a65c1.r5.cf1.rackcdn.com/QM116883403-2022831.html that shares some concerns. (You can get to all of the filings by going to the investor relations part of the HTI website.)
The negative impact of the pandemic on our results of operations and cash flows has impacted and could continue to impact our ability to comply with covenants in our Credit Facility, and the amount available for future borrowings thereunder. For example, we would have been in default of a covenant contained in the Credit Facility requiring us to maintain a certain minimum fixed charge coverage ratio for the fiscal quarter ended June 30, 2022 of 1.50 to 1.00. As a result, we entered into the Fourth Amendment to our Credit Facility on August 11, 2022, in which the lenders agreed to reduce this covenant to permit us to avoid any Default or Event of Default. Specifically, this covenant was reduced to (a) 1.20 to 1.00 for the period commencing with the quarter ended June 30, 2022 through the quarter ending June 30, 2023, (b) 1.35 to 1.00 for the period commencing with the quarter ending September 30, 2023 through the quarter ending December 31, 2023 and (c) 1.45 to 1.00 for the period commencing with the quarter ending March 31, 2024 and continuing thereafter, among other changes (see Liquidity and Capital Resources section below and see Note 5 — Credit Facilities, Net to our consolidated financial statements included in this Annual Report on Form 10-K for additional information).
Prospectively, based upon our current expectations, we believe our operating results through June 30, 2023 will allow us to comply with these covenants. However, we believe our operating results may not be sufficient to comply with the increased Fixed Charge Coverage Ratio, which increases from 1.20:1.00 to 1.35:1.00 commencing with the quarter ending September 30, 2023 and thereafter. Absent a waiver or modification from the lender group, failure to comply with the Fixed Charge Coverage Ratio would constitute an Event of Default and the balance of the Credit Facility would be due and payable. We have obtained such waivers and modifications from the lender group in the past, but there can be no assurance that such a waiver or modification will be granted in future periods. Additionally, we are exploring long-term secured financing opportunities, utilizing some or all of our properties as collateral, the proceeds from which we believe will be sufficient to repay all amounts outstanding under the Credit Facility, which was $180.0 million as of December 31, 2022 ($200.0 million including the $20.0 million drawn subsequent to December 31, 2022, see Note 17 — Subsequent Events for details). There can be no assurance these opportunities will result in definitive agreements on favorable terms, or at all.
AJ