Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from the line of Mark Biffert – Oppenheimer.
Mark Biffert - Oppenheimer
I was wondering if you could talk a little bit about the preferred partnership unit buybacks, and you had said that that would be a once-in-a-lifetime opportunity when you did it. Who were the sellers of those shares, and can you a little bit about why they were trading at such large discounts?
John Reyes
We bought it from one seller—an institution, who is the original buyer of the units, I can’t remember how long ago it was when we first sold them the units, but nonetheless, suffice to say, they felt like they needed to see liquidity, were willing to sell at a price that we were willing to buy, and we consummated the transaction.
Ron Havner
All of our preferred transactions were really negotiated separately with various institutions—some closed end funds, some third party institutions, and it really depended on where the preferreds were trading at that price or comparable preferreds and their liquidity needs.
Operator
Your next question comes from the line of Michael Bilerman – Citi.
Michael Bilerman - Citi
Continuing a little bit on the preferred, the preferreds are perpetual in nature and carried a coupon of about 6.4%. You were able to buy them back at about 9.5% investment yield, but I am curious Ron about your comments related to deleveraging today to about 25% and treating the preferreds, I guess, as debt in that calculation even though they are perpetual in nature. How do you think about what will be the investment opportunities on the horizon at some point? It sounds like comparing it to the early ?90s of getting excited for that, and taking out a slug while I know you have all the free cash flow and sitting on cash, but taking out a piece of the cap structure that was priced at 6.4% which while it produced a nice gain of getting it, I’m not sure that’s going to be replicable in the future if we’re in this cap rate environment, and so I’m just trying to think about how you put everything together in terms of spending this capital and then also where you think leverage is shake out over time.
Ron Havner
You may have computed a 9.5% blend, I am not sure. In there was one preferred, $25 million, that we redeemed that had a 6.5% coupon that had a put on it, so that really just became due this year.
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