N-Q 1 nq.htm nq.htm
As filed with the Securities and Exchange Commission on March 31, 2010
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.  20549
 
FORM N-Q
 
QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF
REGISTERED MANAGEMENT INVESTMENT COMPANIES
 
Investment Company Act file number: 811-21421
 
NEUBERGER BERMAN REAL ESTATE SECURITIES INCOME FUND INC.
(Exact Name of the Registrant as Specified in Charter)
605 Third Avenue, 2nd Floor
New York, New York 10158-0180
(Address of Principal Executive Offices – Zip Code)
 
Registrant's telephone number, including area code: (212) 476-8800
 
Robert Conti, Chief Executive Officer and President
Neuberger Berman Real Estate Securities Income Fund Inc.
605 Third Avenue, 2nd Floor
New York, New York 10158-0180
 
Arthur Delibert, Esq.
K&L Gates LLP
1601 K Street, N.W.
Washington, D.C. 20006-1600
(Names and addresses of agents for service)
 
Date of fiscal year end: October 31, 2010
 
Date of reporting period: January 31, 2010
 
Form N-Q is to be used by management investment companies, other than small business investment companies registered on Form N-5 (§§ 239.24 and 274.5 of this chapter), to file reports with the Commission not later than 60 days after the close of their first and third fiscal quarters, pursuant to Rule 30b1-5 under the Investment Company Act of 1940 (“1940 Act”) (17 CFR 270.30b1-5). The Commission may use the information provided on Form N-Q in its regulatory, disclosure review, inspection, and policymaking roles.
 
A registrant is required to disclose the information specified by Form N-Q, and the Commission will make this information public. A registrant is not required to respond to the collection of information contained in Form N-Q unless the Form displays a currently valid Office of Management and Budget (“OMB”) control number. Please direct comments concerning the accuracy of the information collection burden estimate and any suggestions for reducing the burden to the Secretary, Securities and Exchange Commission, 100 F Street, NE, Washington, DC 20549-0609. The OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. § 3507.

 
 

 


Item 1. Schedule of Investments.
JANUARY 31, 2010


Schedule of Investments Real Estate Securities Income Fund Inc.
(UNAUDITED)
 
Number of Shares
   
Value†
($000's omitted)
 
Common Stocks (65.2%)
     
Apartments (5.6%)
     
33,900
 
AvalonBay Communities
   
2,597
 
52,200
 
BRE Properties
   
1,674
 
249,000
 
Equity Residential
   
7,980
 
 
12,251
     
Diversified (2.4%)
     
81,999
 
Vornado Realty Trust
   
5,304
ØØ
Health Care (7.9%)
     
106,800
 
HCP, Inc.
   
3,028
 
42,700
 
Health Care REIT
   
1,836
 
372,200
 
OMEGA Healthcare Investors
   
6,964
 
130,352
 
Ventas, Inc.
   
5,501
 
 
17,329
     
Home Financing (6.8%)
     
376,500
 
Annaly Capital Management
   
6,544
 
433,100
 
Starwood Property Trust
   
8,493
 
 
15,037
     
Industrial (7.1%)
     
256,500
 
AMB Property
   
6,156
 
102,222
 
EastGroup Properties
   
3,911
 
442,000
 
ProLogis
   
5,569
 
 
15,636
     
Office (9.3%)
     
70,100
 
Boston Properties
   
4,547
 
629,800
 
Brandywine Realty Trust
   
7,073
 
291,180
 
Highwoods Properties
   
8,796
 
 
20,416
     
Real Estate Management & Development (2.2%)
     
396,000
 
Brookfield Properties
   
4,740
 
Regional Malls (8.6%)
     
311,279
 
Macerich Co.
   
9,603
È
117,733
 
Simon Property Group
   
8,477
 
25,300
 
Taubman Centers
   
801
 
 
18,881
     
Self Storage (6.2%)
     
278,683
 
Extra Space Storage
   
3,163
 
119,700
 
Public Storage, Depositary Shares
   
3,040
 
219,601
 
Sovran Self Storage
   
7,445
 
 
13,648
     
Shopping Centers (7.7%)
     
42,300
 
Federal Realty Investment Trust
   
2,723
 
479,300
 
Kimco Realty
   
6,049
 
127,064
 
Regency Centers
   
4,255
ØØ
99,035
 
Tanger Factory Outlet Centers
   
3,793
 
 
16,820
     
Specialty (1.4%)
     
63,200
 
Digital Realty Trust
   
3,034
 
Total Common Stocks
(Cost $123,709)
 
143,096
     


See Notes to Schedule of Investments
 
 

JANUARY 31, 2010
 
 
Schedule of Investments Real Estate Securities Income Fund Inc. cont’d
(UNAUDITED)
 
Number of Shares
   
Value†
($000's omitted)
 
Preferred Stocks (81.6%)
 
Apartments (8.4%)
 
138,000
 
Apartment Investment & Management, Ser. T
   
3,098
 
129,040
 
Apartment Investment & Management, Ser. U
   
2,840
 
200,000
 
Associated Estates Realty, Ser. B
   
5,050
 
296,070
 
Mid-America Apartment Communities, Ser. H
   
7,402
 
 
18,390
     
Commercial Financing (4.8%)
     
605,000
 
NorthStar Realty Finance, Ser. B
   
10,660
 
Diversified (7.1%)
     
160,000
 
Cousins Properties, Ser. B
   
3,366
 
580,000
 
Lexington Corp. Properties Trust, Ser. B
   
12,169
 
 
15,535
     
Health Care (17.2%)
     
534,483
 
Health Care REIT, Ser. D
   
13,362
 
470,000
 
LTC Properties, Ser. F
   
11,482
 
524,722
 
OMEGA Healthcare Investors, Ser. D
   
12,987
 
 
37,831
     
Hybrid (2.7%)
     
150,000
 
iStar Financial, Ser. E
   
1,650
 
200,000
 
iStar Financial, Ser. G
   
2,142
 
200,000
 
iStar Financial, Ser. I
   
2,110
 
 
5,902
     
Insurance (5.8%)
     
504,900
 
Hilltop Holdings, Ser. A
   
12,653
 
Lodging (7.0%)
     
170,000
 
Ashford Hospitality Trust, Ser. D
   
3,075
 
260,800
 
Eagle Hospitality
   
65
 
27,700
 
Felcor Lodging Trust, Ser. C
   
337
 
162,800
 
Hersha Hospitality Trust, Ser. A
   
3,435
 
81,700
 
Hospitality Properties Trust, Ser. B
   
2,050
 
74,000
 
Host Hotels & Resorts, Ser. E
   
1,887
 
90,000
 
Strategic Hotels & Resorts, Ser. A
   
1,291
ñ
116,400
 
Strategic Hotels & Resorts, Ser. B
   
1,647
 
65,900
 
Sunstone Hotel Investors, Ser. A
   
1,487
 
 
15,274
     
Manufactured Homes (0.1%)
     
19,600
 
American Land Lease, Ser. A
   
245
 
Mixed (0.4%)
     
32,000
 
PS Business Parks, Ser. K
   
784
 
Office (12.2%)
     
100,000
 
Brandywine Realty Trust, Ser. C
   
2,290
 
80,000
 
Brandywine Realty Trust, Ser. D
   
1,820
 
40,000
 
Corporate Office Properties Trust, Ser. H
   
916
 
6,000
 
Highwoods Properties, Ser. A
   
6,113
 
21,767
 
HRPT Properties Trust, Ser. B
   
532
 
 

 
See Notes to Schedule of Investments


 
 
 

 

JANUARY 31, 2010


Schedule of Investments Real Estate Securities Income Fund Inc. cont’d
(UNAUDITED)

 

Number of Shares
   
Value†
($000's omitted)
478,000
 
Parkway Properties, Ser. D
   
11,070
 
100,000
 
SL Green Realty, Ser. C
   
2,305
 
73,200
 
SL Green Realty, Ser. D
   
1,719
 
 
26,765
     
Regional Malls (9.3%)
     
98,000
 
Glimcher Realty Trust, Ser. F
   
1,818
 
523,400
 
Glimcher Realty Trust, Ser. G
   
9,212
 
151,300
 
Taubman Centers, Ser. G
   
3,767
 
241,600
 
Taubman Centers, Ser. H
   
5,707
 
 
20,504
     
Shopping Centers (3.7%)
     
60,000
 
Cedar Shopping Centers, Ser. A
   
1,485
 
66,000
 
Developers Diversified Realty, Ser. I
   
1,323
 
225,000
 
Tanger Factory Outlet Centers, Ser. C
   
5,366
 
 
8,174
     
Specialty (2.9%)
     
140,000
 
Digital Realty Trust, Ser. A
   
3,496
 
122,200
 
Digital Realty Trust, Ser. B
   
2,957
 
 
6,453
     
Total Preferred Stocks
(Cost $211,360)
 
179,170
     
       
Short-Term Investments (5.1%)
     
8,577,772
 
Neuberger Berman Securities Lending Quality Fund, LLC
 
8,749
2,528,718
 
State Street Institutional Liquid Reserves Fund Institutional Class
 
2,529
 
Total Short-Term Investments
(Cost $11,278)
 
11,278
     
         
Total Investments (151.9%)
(Cost $346,347)
 
333,544
##
 
Liabilities, less cash, receivables and other assets [(17.7%)]
(38,764)
@@
 
Liquidation Value of Auction Market Preferred Shares [(34.2%)] (75,200)    
           
Total Net Assets Applicable to Common Shareholders (100.0%)
 
$219,580
   






See Notes to Schedule of Investments

 
 
 
 

 
 
January 31, 2010 (Unaudited)
                                                                 
 
Notes to Schedule of Investments

The value of investments in equity securities and interest rate swap contracts by Neuberger Berman Real Estate Securities Income Fund Inc. (the “Fund”) is determined by Neuberger Berman Management LLC (“Management”) primarily by obtaining valuations from an independent pricing service based on the latest sale price when that price is readily available. Securities traded primarily on the NASDAQ Stock Market are normally valued by the Fund at the NASDAQ Official Closing Price ("NOCP") provided by NASDAQ each business day. The NOCP is the most recently reported price as of 4:00:02 p.m., Eastern time, unless that price is outside the range of the "inside" bid and asked prices (i.e., the bid and asked prices that dealers quote to each other when trading for their own accounts); in that case, NASDAQ will adjust the price to equal the inside bid or asked price, whichever is closer. Because of delays in reporting trades, the NOCP may not be based on the price of the last trade to occur before the market closes. If there is no reported sale of a security on a particular day, the independent pricing service may value the security based on reported market quotations.  Management has developed a process to periodically review information provided by independent pricing services. If a valuation is not available from an independent pricing service, the Fund seeks to obtain quotations from principal market makers. If such quotations are not readily available, securities are valued using methods the Board of Directors of the Fund (the “Board”) has approved on the belief that they reflect fair value.  Numerous factors may be considered when determining the fair value of a security, including available analyst, media or other reports, trading in futures or ADRs and whether the issuer of the security being fair valued has other securities outstanding.  Foreign security prices are furnished by independent quotation services and expressed in local currency values. Foreign security prices are currently translated from the local currency into U.S. dollars using the exchange rate as of 4:00 p.m., Eastern time. The Board has approved the use of Interactive Data Pricing and Reference Data, Inc. (“Interactive”) to assist in determining the fair value of the Fund’s foreign equity securities when changes in the value of a certain index suggest that the closing prices on the foreign exchanges may no longer represent the amount that the Fund could expect to receive for those securities.  In this event, Interactive will provide adjusted prices for certain foreign equity securities using a statistical analysis of historical correlations of multiple factors. In the absence of precise information about the market values of these foreign securities as of the close of the New York Stock Exchange, the Board has determined on the basis of available data that prices adjusted in this way are likely to be closer to the prices the Fund could realize on a current sale than are the prices of those securities established at the close of the foreign markets in which the securities primarily trade. Fair value prices are necessarily estimates, and there is no assurance that such a price will be at or close to the price at which the security next trades.  Short-term debt securities with less than 60 days until maturity may be valued at cost, which, when combined with interest earned, is expected to approximate market value.
 
In accordance with Accounting Standards Codification (“ASC”) 820 “Fair Value Measurements and Disclosures” (“ASC 820”), formerly known as Financial Accounting Standards Board (“FASB”) Statement of Financial Accounting Standards No. 157, “Fair Value Measurements,” investments held by the Fund are carried at “fair value” as defined by ASC 820. Fair value is defined as the price that a fund would receive upon selling an investment in an orderly transaction to an independent buyer in the principal or most advantageous market for the investment under current market conditions. Various inputs, including the volume and level of activity for the asset or liability in the market are considered in determining the value of the Fund’s investments, some of which are discussed above. Significant management judgment may be necessary to estimate fair value in accordance with ASC 820.

In addition to defining fair value, ASC 820 established a three-tier hierarchy of inputs to establish a classification of fair value measurements for disclosure purposes. 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, prepayment speeds, credit risk, amortized cost, etc.)
  
Level 3 – significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of investments)
 


 
For information on the Fund’s significant accounting policies, please refer to the Fund’s most recent shareholder reports.
 

 
 

 
 
The inputs or methodology used for valuing an investment are not necessarily an indication of the risk associated with investing in those securities.

The following is a summary, by category of Level, of inputs used to value the Fund’s investments as of January 31, 2010:

 
Asset Valuation Inputs
 
 (000’s omitted)
Investments:
 
Level 1
 
 Level 2
 
 Level 3
 
Total
 
Common Stocks
               
   
Apartments
 
$12,251
 
$—
 
$—
 
$12,251
   
Diversified
 
5,304
 
 
 
5,304
   
Health Care
 
17,329
 
 
 
17,329
   
Home Financing
 
15,037
 
 
 
15,037
   
Industrial
 
15,636
 
 
 
15,636
   
Office
 
20,416
 
 
 
20,416
   
Real Estate Management & Development
 
4,740
 
 
 
4,740
   
Regional Malls
 
18,881
 
 
 
18,881
   
Self Storage
 
13,648
 
 
 
13,648
   
Shopping Centers
 
16,820
 
 
 
16,820
   
Specialty
 
3,034
 
 
 
3,034
 
Total Common Stocks
 
143,096
 
 
 
143,096
 
Preferred Stocks
               
   
Apartments
 
10,988
 
7,402
 
 
18,390
   
Commercial Financing
 
10,660
 
 
 
10,660
   
Diversified
 
15,535
 
 
 
15,535
   
Health Care
 
24,469
 
13,362
 
 
37,831
   
Hybrid
 
5,902
 
 
 
5,902
   
Insurance
 
 
12,653
 
 
12,653
   
Lodging
 
10,843
 
4,431
 
 
15,274
   
Manufactured Homes
 
245
 
 
 
245
   
Mixed
 
784
 
 
 
784
   
Office
 
19,736
 
7,029
 
 
26,765
   
Regional Malls
 
20,504
 
 
 
20,504
   
Shopping Centers
 
6,851
 
1,323
 
 
8,174
   
Specialty
 
6,453
 
 
 
6,453
 
Total Preferred Stocks
 
132,970
 
46,200
 
 
179,170
 
Short-Term Investments
 
 
11,278
 
 
11,278
 
Total Investments
 
$276,066
 
$57,478
 
$—
 
$333,544

 
Liability Valuation Inputs
 
The following is a summary, by category of Level, of inputs used to value the Fund’s derivatives as of January 31, 2010:
 
 
(000’s omitted)
 
Level 1
 
Level 2
 
Level 3
 
Total
                   
 
Interest rate swap contracts
 
 $
 
$(7,856)
 
$—
 
$(7,856)
 
##
At January 31, 2010, the cost of investments for U.S. federal income tax purposes was $350,230,000. Gross unrealized appreciation of investments was $27,301,000 and gross unrealized depreciation of investments was $43,987,000, resulting in net unrealized depreciation of $16,686,000 based on cost for U.S. federal income tax purposes.
 
Managed by an affiliate of Management and could be deemed an affiliate of the Fund and is segregated in connection with obligations for security lending.
 
È
All or a portion of this security is on loan.
 
ñ
Restricted security subject to restrictions on resale under federal securities laws. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers under Rule 144A under the Securities Act of 1933, as amended, and have been deemed by the investment manager to be liquid.  At January 31, 2010, these securities amounted to approximately $1,291,000 or 0.6% of net assets applicable to common shareholders.
 

 
For information on the Fund’s significant accounting policies, please refer to the Fund’s most recent shareholder reports.
 

 
 

 
 
 
ØØ
All or a portion of this security is segregated in connection with obligations for interest rate swap contracts.
 
@@
At January 31, 2010, the Fund had an outstanding interest rate swap contract as follows:
 

       
Rate Type
   
 
Swap
Counter Party
Notional Amount
Termination Date
Fixed-rate Payments Made by the Fund
Variable-rate Payments
      Received by
the Fund
Accrued Net Interest Receivable
(Payable)
Unrealized Appreciation
(Depreciation)
Total Fair Value
 
Citibank, N.A.
$75,000,000
July 2, 2012
5.440%
0.230%(1)
$(303,862)
$(7,552,101)
$(7,855,963)
 
(1) 30 day LIBOR (London Interbank Offered Rate) at December 30, 2009.
 
 
 
For information on the Fund’s significant accounting policies, please refer to the Fund’s most recent shareholder reports.


 
 

 


 
Item 2. Controls and Procedures.
 
(a)
Based on an evaluation of the disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940, as amended (“1940 Act”)), as of a date within 90 days of the filing date of this document, the Chief Executive Officer and Treasurer and Principal Financial and Accounting Officer of the Registrant have concluded that such disclosure controls and procedures are effectively designed to ensure that information required to be disclosed by the Registrant on Form N-CSR and Form N-Q is accumulated and communicated to the Registrant’s management to allow timely decisions regarding required disclosure.
 
(b)
There were no significant changes in the Registrant’s internal controls 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
 
The certifications required by Rule 30a-2(a) of the 1940 Act are filed herewith.
 
 
 

 
 

 

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.
 
Neuberger Berman Real Estate Securities Income Fund Inc.
 
By:
/s/ Robert Conti 
 
Robert Conti
Chief Executive Officer
   
Date:
March 31, 2010
 
 
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/ Robert Conti 
 
Robert Conti
Chief Executive Officer
   
Date:
March 31, 2010
 


By:
/s/ John M. McGovern 
 
John M. McGovern
Treasurer and Principal Financial
and Accounting Officer
   
Date:
March 31, 2010