Replies to post #28946 on A.I.M. Users Bulletin Board (AIMUSERS)

[OldAIMGuy]

Thanks ET, Re: NRO................

When they were bought from Lehman Bros. they nearly immediately started to buy back the leveraged position. It is similar to the situation at Calamos. So, we can probably expect a dividend cut sometime in the early part of the new year.

I don't believe they told me how much of their current distribution was from the AMPS. The level left not redeemed was a moving target at the time. Here's what is said about NRO at their web site. It's dated October 29th.

NEUBERGER BERMAN REAL ESTATE SECURITIES INCOME FUND INC. 
 (AMEX: NRO) ANNOUNCES SCHEDULE FOR PARTIAL REDEMPTIONS OF ITS  
 AUCTION MARKET PREFERRED SHARES AND A REDUCTION IN LEVERAGE  
  
 The Fund will redeem $93,300,000 of its outstanding AMPS at a  
 price equal to the per share liquidation preference of  
 $25,000 plus any accumulated and unpaid dividends. NRO will  
 use cash to fund these redemptions (see redemption schedule)  
 and they will represent a reduction in NRO’s total leverage.  
  
 Upon completion of the redemptions announced today, the Fund  
 will have redeemed approximately 70% of the AMPS it initially  
 issued and reduced its leverage by approximately $333.3  
 million.  
  
 The decision to reduce the Fund’s leverage by partially  
 redeeming its outstanding AMPS was the result of the  
 continued challenges the Fund has experienced in the markets  
 for its portfolio securities, and in particular, common and  
 preferred stocks issued by Real Estate Investment Trusts  
 ("REITs").  
  
 Due to the unprecedented market volatility and economic  
 uncertainty, the Fund’s investment manager believes that a  
 lower level of leverage is appropriate and may provide  
 greater stability to the Fund.  
  
 As previously announced, the Fund has entered into a credit  
 facility with a major unaffiliated financial institution,  
 whereby the Fund has access to approximately $240 million  
 that may be used for financial leverage.  
  
 The Fund is not currently using any of the financing  
 available under this credit facility but could choose to use  
 it should market conditions permit and the Fund’s investment  
 manager determine that it is in the best interest of the  
 Fund’s shareholders. 

So, they should know soon just what their continuing distribution rate is going to be. The December dividend has already been declared, so that one is in the books. After that, we should see an adjustment.

Best regards, Tom