High Yielding preferred

I have a couple of preferred shares which are very high yielding, but a little riskier than the aegon preferred. But they do offer a compelling risk/reward ration.

The first one is bee-pa This is a preferred for Strategic Hotels & Resorts. They own a bunch of branded luxury hotels. Right now it is a horrible time for hotels as people don't have money to spend of vacations. However, they look like they will be cash flow positive next year. They have halted their dividend. Also, they do not have any debt to pay off until 2011. They also have 116 million in cash with some of the cash being restricted. However, they do have financial covenants to be able to borrow under their bank credit facility. Currently, they do meet these convenants.

It is hard to predict what will happen with the economy over the next year. However, my gut feeling is that they will survive. Currently their preferred is paying 50% yield at these depressed prices. This seems like a great deal to me. If economy comes back, bee-pa will go from $4 something to $20 something.

Another one I like is slm-pb. This is Sallie Mae (Studen Loan Lender). This preferred has a par value of $100 and it trading at $16. It is a floating rate preferred based on the libor rate. As current prices it yielding around 20%+. However, if the libor rate goes up, this could yield much, much more. However, I dont like Sallie Mae that much as a business. They might have to take big writedowns on their portfolios if students do not pay their loans this coming year. This could cause liquidity issues. However, they will be supported by Department of Education, which will provide them with funding. This company will never go out of business, but if things get horrible the government could just take them over and if the deal is like what happened with fannie mae, then the preferred could be worthless.