N-Q 1 n-q.htm
As filed with the Securities and Exchange Commission on March 29, 2016
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: 811-21421
NEUBERGER BERMAN REAL ESTATE SECURITIES INCOME FUND INC.
(Exact Name of Registrant as Specified in Charter)
c/o Neuberger Berman Investment Advisers LLC
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.
c/o Neuberger Berman Investment Advisers LLC
605 Third Avenue, 2nd Floor
New York, New York 10158-0180
Arthur C. 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
Date of reporting period:  January 31, 2016
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.

 
Schedule of Investments Real Estate Securities Income Fund Inc.
(Unaudited) 1/31/16
 

   
NUMBER OF
SHARES
 
VALUE($)
 
 
Common Stocks (88.6%)
 
Apartments (6.2%)
177,800
 
American Campus Communities, Inc.
 
7,503,160
ØØ
117,501
 
Mid-America Apartment Communities, Inc.
 
11,023,944
ØØ
 
18,527,104
 
Commercial Financing (8.0%)
305,223
 
Apollo Commercial Real Estate Finance, Inc.
 
4,853,046
ØØ
327,500
 
Blackstone Mortgage Trust, Inc. Class A
 
8,115,450
ØØ
583,100
 
Starwood Property Trust, Inc.
 
11,102,224
ØØ
 
24,070,720
 
Data Centers (3.5%)
129,932
 
Digital Realty Trust, Inc.
 
10,404,955
ØØ
 
Diversified (2.3%)
497,200
 
Lexington Realty Trust
 
3,644,476
ØØ
265,950
 
NorthStar Realty Finance Corp.
 
3,156,826
 
 
6,801,302
 
 
Freestanding (1.8%)
509,300
 
Spirit Realty Capital, Inc.
 
5,337,464
ØØ
 
Health Care (15.3%)
132,963
 
Care Capital Properties, Inc.
 
3,980,912
 
228,300
 
HCP, Inc.
 
8,205,102
ØØ
695,700
 
Medical Properties Trust, Inc.
 
7,652,700
ØØ
396,700
 
Omega Healthcare Investors, Inc.
 
12,579,357
ØØ
134,652
 
Ventas, Inc.
 
7,448,949
ØØ
97,300
 
Welltower, Inc.
 
6,054,006
ØØ
 
45,921,026
 
Home Financing (2.5%)
402,524
 
Altisource Residential Corp.
 
4,005,114
 
376,500
 
Annaly Capital Management, Inc.
 
3,576,750
ØØ
 
7,581,864
 
Industrial (7.7%)
140,522
 
EastGroup Properties, Inc.
 
7,502,469
ØØ
200,200
 
Liberty Property Trust
 
5,869,864
ØØ
111,604
 
Prologis, Inc.
 
4,405,010
ØØ
306,700
 
STAG Industrial, Inc.
 
5,192,431
ØØ
 
22,969,774
 
Lodging/Resorts (3.3%)
282,100
 
LaSalle Hotel Properties
 
6,251,336
ØØ
203,800
 
RLJ Lodging Trust
 
3,727,502
ØØ
 
9,978,838
 
Manufactured Homes (2.0%)
87,900
 
Sun Communities, Inc.
 
5,853,261
ØØ
 
Office (5.9%)
46,000
 
Boston Properties, Inc.
 
5,345,660
ØØ
272,880
 
Highwoods Properties, Inc.
 
11,540,095
ØØ
88,650
 
NorthStar Realty Europe Corp.
 
836,856
 
         17,722,611  
Real Estate Management & Development (3.8%)
553,100
 
Brookfield Property Partners LP
 
11,537,666
ØØ
 
Regional Malls (5.2%)
509,700
 
CBL & Associates Properties, Inc.
 
5,479,275
ØØ
38,661
 
Simon Property Group, Inc.
 
7,201,771
ØØ
315,987
 
WP GLIMCHER, Inc.
 
2,869,162
ØØ
 
15,550,208
 
Self Storage (7.4%)
70,100
 
Public Storage
 
17,774,556
ØØ
38,500
 
Sovran Self Storage, Inc.
 
4,338,180
 
 
22,112,736
 
 
Shopping Centers (10.8%)
474,600
 
Kimco Realty Corp.
 
12,904,374
ØØ
593,000
 
Retail Opportunity Investments Corp.
 
10,964,570
ØØ
425,693
 
Urstadt Biddle Properties, Inc. Class A
 
8,641,568
ØØ
 
32,510,512
 
Specialty (2.9%)
145,765
 
EPR Properties
 
8,738,612
ØØ
     
Total Common Stocks
(Cost $241,631,797)
265,618,653
 
     
Preferred Stocks (52.6%)
 
Commercial Financing (3.4%)
131,915
 
iStar, Inc., Ser. E, 7.88%
 
2,704,257
ØØ
185,000
 
iStar, Inc., Ser. G, 7.65%
 
3,792,500
ØØ
185,000
 
iStar, Inc., Ser. I, 7.50%
 
3,792,500
ØØ
 
10,289,257
 
Data Centers (5.7%)
275,000
 
Digital Realty Trust, Inc., Ser. H, 7.38%
 
7,361,750
ØØ
302,000
 
DuPont Fabros Technology, Inc., Ser. A, 7.88%
 
7,691,940
ØØ
81,000
 
DuPont Fabros Technology, Inc., Ser. B, 7.63%
 
2,050,920
ØØ
 
17,104,610
 
Diversified (2.9%)
444,484
 
NorthStar Realty Finance Corp., Ser. B, 8.25%
 
8,591,876
ØØ
 
Industrial (1.9%)
111,000
 
STAG Industrial, Inc., Ser. A, 9.00%
 
2,853,810
 
111,900
 
Terreno Realty Corp., Ser. A, 7.75%
 
2,909,400
ØØ
 
5,763,210
 
Lodging/Resorts (6.6%)
373,400
 
Ashford Hospitality Trust, Inc., Ser. D, 8.45%
 
8,263,342
ØØ
185,800
 
Eagle Hospitality Properties Trust, Inc., Ser. A, 8.25%
 
19
Ñ*
250,000
 
Pebblebrook Hotel Trust, Ser. A, 7.88%
 
6,297,500
ØØ
200,000
 
Sunstone Hotel Investors, Inc., Ser. D, 8.00%
 
5,050,000
ØØ
 
19,610,861
 
Manufactured Homes (1.3%)
150,000
 
Equity LifeStyle Properties, Inc., Ser. C, 6.75%
 
3,807,000
ØØ
 
 
Office (8.9%)
200,000
 
Corporate Office Properties Trust, Ser. L, 7.38%
 
5,084,000
ØØ
6,000
 
Highwoods Properties, Inc., Ser. A, 8.63%
 
7,516,875
ØØ
175,000
 
Kilroy Realty Corp., Ser. H, 6.38%
 
4,432,750
 
369,100
 
SL Green Realty Corp., Ser. I, 6.50%
 
9,541,235
ØØ
 
26,574,860
 
Regional Malls (7.2%)
398,015
 
CBL & Associates Properties, Inc., Ser. D, 7.38%
 
9,671,764
ØØ
185,000
 
CBL & Associates Properties, Inc., Ser. E, 6.63%
 
4,129,200
 
200,000
 
Taubman Centers, Inc., Ser. J, 6.50%
 
5,129,000
ØØ
100,000
 
WP GLIMCHER, Inc., Ser. H, 7.50%
 
2,514,000
 
 
21,443,964
 
Self Storage (3.6%)
400,000
 
Public Storage, Ser. Y, 6.38%
 
10,844,000
ØØ
 
Shopping Centers (9.0%)
202,000
 
Cedar Realty Trust, Inc., Ser. B, 7.25%
 
5,050,000
ØØ
250,000
 
DDR Corp., Ser. K, 6.25%
 
6,317,500
ØØ
200,000
 
Inland Real Estate Corp., Ser. B, 6.95%
 
5,030,000
ØØ
171,847
 
Regency Centers Corp., Ser. 6, 6.63%
 
4,483,488
 
99,000
 
Saul Centers, Inc., Ser. C, 6.88%
 
2,554,200
 
140,000
 
Urstadt Biddle Properties, Inc., Ser. G, 6.75%
 
3,588,200
 
 
27,023,388
 
Single Family Homes (2.1%)
150,000
 
American Homes 4 Rent, Ser. B, 5.00%
 
3,852,000
a
100,000
 
American Homes 4 Rent, Ser. C, 5.50%
 
2,548,000
a
 
6,400,000
 
Total Preferred Stocks
(Cost $153,064,456)
157,453,026
 
 
Short-Term Investments (0.5%)
1,630,199
 
State Street Institutional Liquid Reserves Fund Premier Class, 0.36% (Cost  $1,630,199)
 
1,630,199
b
       
Total Investments (141.7%)
(Cost $396,326,452)
 
424,701,878
##
       
Liabilities, less cash, receivables and other assets [(33.4%)]
 
(100,048,558)
 
        
Liquidation Value of Mandatory Redeemable Preferred Shares [(8.3%)]
 
(25,000,000)
 
       
Total Net Assets Applicable to Common Stockholders (100.0%)
$
299,653,320
 
 
 
See Notes to Schedule of Investments


January 31, 2016 (Unaudited)

Notes to Schedule of Investments

In accordance with Accounting Standards Codification (“ASC”) 820 “Fair Value Measurement” (“ASC 820”), all investments held by Neuberger Berman Real Estate Securities Income Fund Inc. (the “Fund”) are carried at the value that Neuberger Berman Investment Advisers LLC (“Management”) believes the 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 valuing the Fund’s investments, some of which are discussed below. Significant Management judgment may be necessary to value investments in accordance with ASC 820.

ASC 820 established a three-tier hierarchy of inputs to create a classification of 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 observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, amortized cost, etc.)
Level 3 – unobservable inputs (including the Fund’s own assumptions in determining the fair value of investments)

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

The value of the Fund’s investments in equity securities and exchange traded funds, for which market quotations are readily available, is generally determined by Management by obtaining valuations from independent pricing services based on the latest sale price quoted on a principal exchange or market for that security (Level 1 inputs). Securities traded primarily on the NASDAQ Stock Market are normally valued 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 sale of a security on a particular day, the independent pricing services may value the security based on market quotations. The value of certain preferred stock is determined by Management by obtaining valuations from independent pricing services which are based on market information which may include benchmark yields, reported trades, broker/dealer quotes, issuer spreads, benchmark securities, bids, offers, and reference data, such as market research publications, when available (generally Level 2 inputs).

Management has developed a process to periodically review information provided by independent pricing services for all types of securities.

Investments in non-exchange traded investment companies are valued using the respective fund’s daily calculated net asset value per share (Level 2 inputs).

If a valuation is not available from an independent pricing service, or if Management has reason to believe that the valuation received does not represent the amount the Fund might reasonably expect to receive on a current sale in an orderly transaction, Management seeks to obtain quotations from brokers or dealers (generally considered Level 2 or Level 3 inputs depending on the number of quotes available). If such quotations are not readily available, the security is valued using methods the Fund’s Board of Directors (the “Board”) has approved in the good-faith belief that the resulting valuation will reflect the fair value of the security. Numerous factors may be considered when determining the fair value of a security based on Level 2 or Level 3 inputs, including available analyst, media or other reports, trading in financial futures or American Depositary Receipts (“ADRs”) and whether the issuer of the security being fair valued has other securities outstanding.

The value of the Fund’s investments in foreign securities is generally determined using the same valuation methods and inputs as other Fund investments, as discussed above. Foreign security prices expressed in local currency values
 
 
For information on the Fund’s significant accounting policies, please refer to the Fund’s most recent stockholder reports.

are translated from the local currency into U.S. dollars using the exchange rates as of the end of regular trading on the New York Stock Exchange (“NYSE”) on business days, usually 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 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 or on days when foreign markets are closed and U.S. markets are open. In each of these events, Interactive will provide adjusted prices for certain foreign equity securities using a statistical analysis of historical correlations of multiple factors (Level 2 inputs). In the absence of precise information about the market values of these foreign securities as of the close of the NYSE, 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 is next quoted or next trades.

The following is a summary, categorized by Level, of inputs used to value the Fund’s investments as of January 31, 2016:
 
Asset Valuation Inputs
 
Investments:
 
Level 1
 
 Level 2
 
 Level 3
 
Total
Common Stocks^
$
     265,618,653
$
$
$
        265,618,653
Preferred Stocks
               
 
Lodging/Resorts
 
19,610,842
 
19
 
 
19,610,861
 
Office
 
19,057,985
 
7,516,875
 
 
26,574,860
 
Other Preferred Stocks^
 
111,267,305
 
 
 
111,267,305
Total Preferred Stocks
 
149,936,132
 
7,516,894
 
 
157,453,026
Short-Term Investments
 
 
1,630,199
 
 
1,630,199
Total Investments
$
415,554,785
$
9,147,093
$
$
424,701,878

^ The Schedule of Investments provides information on the industry categorization for the portfolio.

As of the period ended January 31, 2016, the Fund had no transfers between Levels 1, 2 or 3 based on the beginning of period market values as of October 31, 2015.

## At January 31, 2016, the cost of investments for U.S. federal income tax purposes was $395,930,244. Gross unrealized appreciation of investments was $65,528,985 and gross unrealized depreciation of investments was $36,757,351 resulting in net unrealized appreciation of $28,771,634 based on cost for U.S. federal income tax purposes.
          
a
Coupon rate is a fixed rate for an initial period, then resets at a specific date and rate.

b The rate shown is the annualized seven day yield at January 31, 2016.

* Security did not produce income during the last twelve months.

ØØ
All or a portion of this security is pledged in connection with the Fund’s loans payable outstanding.

Ñ This security has been deemed by the investment manager to be illiquid. At January 31, 2016, the security amounted to $19 or 0.00% of net assets applicable to common stockholders.
 
 
For information on the Fund’s significant accounting policies, please refer to the Fund’s most recent stockholder 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 1940 Act), as of a date within 90 days of the filing date of this report, the Chief Executive Officer and President and the 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-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 and President
 
   
Date:  March 29, 2016
 
 
 
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 and President
 
     
Date:  March 29, 2016
 
   
   
By:
 /s/ John M. McGovern
 
 
John M. McGovern
 
 
Treasurer and Principal Financial
 
 
and Accounting Officer
 
     
Date:  March 29, 2016