UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

 

FORM N-Q

 

QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF REGISTERED
MANAGEMENT INVESTMENT COMPANY

 

Investment Company Act file number

811-21671

 

 

RMR PREFERRED DIVIDEND FUND

(Exact name of registrant as specified in charter)

 

400 CENTRE STREET NEWTON, MASSACHUSETTS

 

02458

(Address of principal executive offices)

 

(Zip code)

 

Adam D. Portnoy, President

RMR Preferred Dividend Fund

400 Centre Street

Newton, Massachusetts 02458

(Name and address of agent for service)

 

Copy to:

 

Brian D. O’Sullivan

State Street Bank and Trust Company

801 Pennsylvania Avenue, Tower II, 4th Floor

Kansas City, Missouri 64102

 

Elizabeth Watson, Esq.

State Street Bank and Trust Company

2 Avenue De Lafayette, 6th Floor

Boston, Massachusetts 02111

 

Registrant's telephone number, including area code:

(617) 332-9530

 

 

Date of fiscal year end:

December 31

 

 

 

 

Date of reporting period:

March 31, 2008

 

 


 

RMR Preferred Dividend Fund

Portfolio of Investments  –  March 31, 2008 (unaudited)

 

Company

 

Shares

 

Value

 

Preferred Stocks – 151.5%

 

 

 

 

 

Real Estate Investment Trusts– 131.6%

 

 

 

 

 

Apartments – 13.7%

 

 

 

 

 

Apartment Investment & Management Co., Series G

 

56,400

 

$

1,381,236

 

Apartment Investment & Management Co., Series T

 

10,000

 

227,900

 

Associated Estates Realty Corp., Series B

 

39,800

 

961,170

 

Mid-America Apartment Communities, Inc., Series H

 

41,400

 

1,003,950

 

 

 

 

 

3,574,256

 

Diversified – 14.9%

 

 

 

 

 

Colonial Properties Trust, Series D

 

10,000

 

244,000

 

Cousins Properties, Inc., Series B

 

17,000

 

347,650

 

Digital Realty Trust, Inc., Series A

 

56,200

 

1,292,038

 

Duke Realty Corp., Series O

 

4,000

 

98,400

 

LBA Realty LLC, Series B

 

25,000

 

450,750

 

Lexington Realty Trust, Series B

 

69,000

 

1,466,250

 

 

 

 

 

3,899,088

 

Health Care – 4.5%

 

 

 

 

 

LTC Properties, Inc., Series F

 

4,000

 

96,720

 

OMEGA Healthcare Investors Inc., Series D

 

43,200

 

1,080,000

 

 

 

 

 

1,176,720

 

Hospitality – 51.8%

 

 

 

 

 

Ashford Hospitality Trust, Series A

 

58,000

 

1,073,000

 

Ashford Hospitality Trust, Series D

 

7,200

 

131,040

 

Eagle Hospitality Properties Trust, Inc., Series A

 

95,000

 

950,000

 

Entertainment Properties Trust, Series B

 

9,100

 

204,750

 

Entertainment Properties Trust, Series D

 

30,000

 

608,400

 

FelCor Lodging Trust, Inc., Series C

 

167,400

 

3,289,410

 

Grace Acquisition I, Inc., Series B

 

83,800

 

838,000

 

Grace Acquisition I, Inc., Series C

 

18,900

 

189,000

 

Hersha Hospitality Trust, Series A

 

99,500

 

2,139,250

 

Host Marriott Corp., Series E

 

15,000

 

377,250

 

LaSalle Hotel Properties, Series E

 

70,000

 

1,529,150

 

Strategic Hotels & Resorts, Inc., Series A

 

13,000

 

245,050

 

Strategic Hotels & Resorts, Inc., Series B

 

39,100

 

752,284

 

Strategic Hotels & Resorts, Inc., Series C

 

27,200

 

511,768

 

Sunstone Hotel Investors, Inc., Series A

 

36,500

 

684,375

 

 

 

 

 

13,522,727

 

Mortgage – 12.5%

 

 

 

 

 

Accredited Mortgage Loan REIT Trust, Series A

 

1,500

 

17,250

 

American Home Mortgage Investment Corp., Series A

 

74,300

 

4,644

 

Anthracite Capital, Inc., Series C

 

3,000

 

48,750

 

Anthracite Capital, Inc., Series D

 

51,000

 

675,750

 

Gramercy Capital Corp., Series A

 

20,000

 

365,000

 

MFA Mortgage Investments, Inc., Series A

 

40,000

 

840,000

 

Newcastle Investment Corp., Series B

 

28,000

 

400,400

 

NorthStar Realty Finance Corp., Series A

 

20,000

 

282,000

 

NorthStar Realty Finance Corp., Series B

 

36,000

 

477,000

 

RAIT Financial Trust, Series C

 

12,700

 

149,860

 

 

 

 

 

3,260,654

 

Office – 22.9%

 

 

 

 

 

Alexandria Real Estate Equities, Inc., Series C

 

60,000

 

1,528,800

 

BioMed Realty Trust, Inc., Series A

 

35,000

 

777,000

 

Corporate Office Properties Trust, Series G

 

5,900

 

142,986

 

DRA CRT Acquisition Corp., Series A

 

40,060

 

691,035

 

Kilroy Realty Corp., Series E

 

600

 

13,143

 

Kilroy Realty Corp., Series F

 

44,100

 

934,479

 

Parkway Properties, Inc., Series D

 

41,000

 

966,370

 

SL Green Realty Corp., Series D

 

40,000

 

917,200

 

 

 

 

 

5,971,013

 

 

See notes to portfolio of investments.

 


 

Company

 

Shares or
Principal Amount

 

Value

 

Preferred Stocks – continued

 

 

 

 

 

Real Estate Investment Trusts – continued

 

 

 

 

 

Retail – 11.3%

 

 

 

 

 

Cedar Shopping Centers, Inc., Series A

 

42,000

 

$

971,040

 

Glimcher Realty Trust, Series F

 

30,000

 

561,900

 

Glimcher Realty Trust, Series G

 

15,000

 

255,450

 

Kimco Realty Corp., Series G

 

5,000

 

119,500

 

Taubman Centers, Inc., Series G

 

45,000

 

1,045,350

 

 

 

 

 

2,953,240

 

Total Real Estate Investment Trusts (Cost $44,160,325)

 

 

 

34,357,698

 

Other – 19.9%

 

 

 

 

 

Ford Motor Co., 6/15/43 Series

 

9,400

 

129,626

 

General Motors Corp., 5/15/48 Series

 

26,100

 

401,157

 

Great Atlantic & Pacific Tea Co., 8/01/39 Series

 

87,800

 

2,228,364

 

Hilltop Holdings, Inc., Series A

 

97,200

 

2,045,088

 

Red Lion Hotels Corp., 2/19/44 Series

 

15,925

 

398,125

 

Total Other (Cost $5,749,755)

 

 

 

5,202,360

 

Total Preferred Stocks (Cost $49,910,080)

 

 

 

39,560,058

 

Common Stocks – 10.3%

 

 

 

 

 

Real Estate Investment Trusts – 3.8%

 

 

 

 

 

Diversified – 0.9%

 

 

 

 

 

Colonial Properties Trust

 

9,800

 

235,690

 

Health Care – 0.9%

 

 

 

 

 

Care Investment Trust, Inc.

 

10,600

 

111,830

 

Medical Properties Trust, Inc.

 

11,275

 

127,633

 

 

 

 

 

239,463

 

Mortgage – 1.6%

 

 

 

 

 

Alesco Financial, Inc.

 

142,500

 

410,400

 

Retail – 0.0%

 

 

 

 

 

Feldman Mall Properties, Inc.

 

5,000

 

12,950

 

Storage – 0.4%

 

 

 

 

 

U-Store-It Trust

 

8,900

 

100,837

 

Total Real Estate Investment Trusts (Cost $2,099,413)

 

 

 

999,340

 

Other – 6.5%

 

 

 

 

 

Abingdon Investment, Ltd. (a)

 

150,000

 

906,000

 

American Capital Strategies, Ltd.

 

10,700

 

365,512

 

Iowa Telecommunication Services, Inc.

 

24,500

 

434,385

 

Total Other (Cost $2,462,395)

 

 

 

1,705,897

 

Total Common Stocks (Cost $4,561,808)

 

 

 

2,705,237

 

Debt Securities – 18.5%

 

 

 

 

 

Ford Motor Co., 7.75%, 06/15/2043

 

$

2,210,000

 

1,430,975

 

Ford Motor Co., 8.90%, 01/15/2032

 

557,000

 

417,750

 

General Motors Corp., 8.375%, 07/15/2033

 

2,000,000

 

1,410,000

 

Six Flags, Inc., 9.75%, 04/15/2013

 

2,740,000

 

1,575,500

 

Total Debt Securities (Cost $6,545,858)

 

 

 

4,834,225

 

Other Investment Companies – 4.5%

 

 

 

 

 

Alpine Total Dynamic Dividend Fund

 

32,295

 

519,950

 

Cornerstone Strategic Value Fund, Inc.

 

31,200

 

181,896

 

Eaton Vance Enhanced Equity Income Fund II

 

800

 

13,640

 

LMP Real Estate Income Fund, Inc.

 

4,260

 

62,579

 

Neuberger Berman Real Estate Securities Income Fund, Inc.

 

30,217

 

313,350

 

The Zweig Total Return Fund, Inc.

 

17,750

 

82,360

 

Total Other Investment Companies (Cost $1,574,048)

 

 

 

1,173,775

 

 

See notes to portfolio of investments.

 


 

Total Investments – 184.8% (Cost $62,591,794) (b)

 

 

 

48,273,295

 

Other assets less liabilities – 1.3%

 

 

 

345,256

 

Preferred Shares, at liquidation preference – (86.1)%

 

 

 

(22,500,000

)

Net Assets applicable to common shareholders – 100%

 

 

 

$

26,118,551

 

 

Notes to Portfolio of Investments

 

(a)

144A securities.  Securities restricted for resale to Qualified Institutional Buyers (3.5% of net assets).

(b)

Although subject to adjustments to the extent 2008 distributions by the issuers of the Fund’s investments are characterized as return of capital, the cost, gross unrealized appreciation and gross unrealized depreciation of the Fund’s investments for federal income tax purposes, as of March 31, 2008, are as follows:

 

Cost

 

$

62,591,794

 

 

 

 

 

 

Gross unrealized appreciation

 

$

83,648

 

 

 

 

 

 

Gross unrealized depreciation

 

 

(14,402,147

)

 

 

 

 

 

Net unrealized depreciation

 

$

 (14,318,499

)

 

 

Reference should be made to the Fund’s financial statements for the year ended December 31, 2007, for further information concerning the income tax characterization of the Fund’s investment income and distributions.

 


 

Information regarding FAS 157

 

The Fund has adopted the provisions of Financial Accounting Standards Board Statement of Financial Accounting Standards No. 157, Fair Value Measurements, or FAS 157, effective January 1, 2008. In accordance with FAS 157, fair value is defined as the price that the Fund would receive upon selling an investment in a timely transaction to an independent buyer in the principal or most advantageous market of the investment. FAS 157 established a three tier hierarchy to maximize the use of observable market data and minimize the use of unobservable inputs and to establish classification of fair value measurements for disclosure purposes. Inputs refer broadly to the assumptions that market participants would use in pricing the asset or liability, including assumptions about risk, for example, the risk inherent in a particular valuation technique used to measure fair value including such a pricing model and/or the risk inherent in the inputs to the valuation technique. Inputs may be observable or unobservable. Observable inputs are inputs that reflect the assumptions market participants would use in pricing the asset or liability developed based on market data obtained from sources independent of the reporting entity. Unobservable inputs are inputs that reflect the reporting entity’s own assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. The three tier hierarchy of inputs is summarized in the three broad levels listed below.

 

·                   Level 1 – quoted prices in active markets for identical investments

·                   Level 2 – other significant observable inputs (including quoted prices for similar investments, interest rates,  credit risk, etc.)

·                   Level 3 – significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of investments)

 

The valuation techniques used by the Fund to measure fair value during the three months ended March 31, 2008, maximized the use of observable inputs and minimized the use of unobservable inputs. The Fund utilized broker quotes, company financial information and other market indicators to value the securities whose prices were not readily available.

 

The following is a summary of the inputs used as of March 31, 2008, in valuing the Fund’s investments carried at value:

 

Valuation Inputs

 

Investments in
Securities

 

Level 1 - Quoted prices

 

$

45,390,295

 

Level 2 - Other significant observable inputs

 

1,977,000

 

Level 3 – Significant unobservable inputs

 

906,000

 

Total

 

$

48,273,295

 

 

Following is a reconciliation of investments in which significant unobservable inputs (Level 3) were used in determining value:

 

 

 

Investments in
Securities
Characterized
as Level 3

 

Balance as of 12/31/07

 

$

1,194,000

 

Accrued discounts/premiums

 

—

 

Realized gain/loss and change in unrealized appreciation/depreciation

 

(288,000

)

Net purchases/sales

 

—

 

Net transfers in and/or out of Level 3

 

—

 

Balance, as of 03/31/08

 

$

906,000

 

Net change in unrealized appreciation/depreciation from investments still held as of 03/31/08

 

$

(288,000

)

 


 

Item 2.  Controls and Procedures.

 

(a)  The registrant’s principal executive officer and principal financial officer have concluded that the registrant’s disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940, as amended (the “1940 Act”)), are effective, as of a date within 90 days of the filing date of this report, based on their evaluation of these controls and procedures required by Rule 30a-3(b) under the 1940 Act and Rules 13a-15(b) or 15d-15(b) under the Securities Exchange Act of 1934, as amended.

 

(b)  There were no changes in the registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the 1940 Act) that occurred during the registrant’s last fiscal quarter that have materially affected, or are reasonably likely to materially affect, the registrant’s internal control over financial reporting.

 

Item 3. Exhibits.

 

(a)(1) Certification of Principal Executive Officer, as required by Rule 30a-2(a) under the 1940 Act.

(a)(2) Certification of Principal Financial Officer, as required by Rule 30a-2(a) under the 1940 Act.

 


 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

RMR PREFERRED DIVIDEND FUND

 

By:

/s/ Adam D. Portnoy

 

 

Adam D. Portnoy

 

 

President

 

 

 

 

Date:

May 27, 2008

 

 

 

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

 

 

By:

/s/ Adam D. Portnoy

 

 

Adam D. Portnoy

 

 

President

 

 

 

 

Date:

May 27, 2008

 

 

 

By:

/s/ Mark L. Kleifges

 

 

Mark L. Kleifges

 

 

Treasurer

 

 

 

 

Date:

May 27, 2008

 

 

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