N-Q 1 n-q.htm
As filed with the Securities and Exchange Commission on September 29, 2017
 
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
1290 Avenue of the Americas
 New York, New York 10104-0002
(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
1290 Avenue of the Americas
 New York, New York 10104-0002
 
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:  July 31, 2017
 
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) July 31, 2017
 
 
NUMBER OF
SHARES
  
VALUE†
  
       
Common Stocks 77.8%
 
Apartments 5.5%
 
153,700
  
American Campus Communities, Inc.
$
7,368,378
(a)
 
80,000
  
Mid-America Apartment Communities, Inc.
  
8,282,400
  
 
15,650,778
  
Commercial Financing 8.7%
 
263,923
  
Apollo Commercial Real Estate Finance, Inc.
  
4,758,532
(a)
 
283,200
  
Blackstone Mortgage Trust, Inc. Class A
  
8,742,384
(a)
 
504,200
  
Starwood Property Trust, Inc.
  
11,112,568
(a)
 
24,613,484
  
Data Centers 3.7%
 
165,800
  
DuPont Fabros Technology, Inc.
  
10,334,314
(a)
             
Diversified 1.6%
 
429,900
  
Lexington Realty Trust
  
4,376,382
(a)
             
Free Standing 0.9%
 
330,400
  
Spirit Realty Capital, Inc.
  
2,620,072
  
             
Health Care 13.7%
 
114,963
  
Care Capital Properties, Inc.
  
2,784,404
(a)
 
276,900
  
HCP, Inc.
  
8,763,885
(a)
 
393,666
  
Medical Properties Trust, Inc.
  
5,109,785
(a)
 
282,000
  
Omega Healthcare Investors, Inc.
  
8,908,380
(a)
 
103,500
  
Ventas, Inc.
  
6,970,725
(a)
 
84,100
  
Welltower, Inc.
  
6,172,099
(a)
 
38,709,278
  
Home Financing 3.2%
 
762,400
  
Annaly Capital Management, Inc.
  
9,171,672
(a)
             
Industrial 4.1%
 
71,250
  
Prologis, Inc.
  
4,332,712
(a)
 
265,200
  
STAG Industrial, Inc.
  
7,237,308
(a)
 
11,570,020
  
Lodging/Resorts 5.5%
 
243,900
  
LaSalle Hotel Properties
  
7,204,806
(a)
 
308,700
  
Park Hotels & Resorts, Inc.
  
8,313,291
(a)
 
15,518,097
  
Manufactured Homes 2.4%
 
76,000
  
Sun Communities, Inc.
  
6,764,760
  
             
Office 5.5%
 
40,000
  
Boston Properties, Inc.
  
4,836,400
(a)
 
205,680
  
Highwoods Properties, Inc.
  
10,596,634
(a)
 
15,433,034
  
Real Estate Management & Development 4.3%
 
507,500
  
Brookfield Property Partners LP
  
12,129,250
(a)
             
Regional Malls 3.6%
 
265,300
  
CBL & Associates Properties, Inc.
  
2,331,987
  
 
33,500
  
Simon Property Group, Inc.
  
5,309,750
(a)
 
273,187
  
Washington Prime Group, Inc.
  
2,464,147
(a)
 
10,105,884
  
NUMBER OF
SHARES
  
VALUE†
  
        
Self Storage 6.7%
 
87,500
  
Extra Space Storage, Inc.
 
6,956,250
(a)
 
33,300
  
Life Storage, Inc.
  
2,432,232
(a)
 
46,120
  
Public Storage
  
9,480,888
(a)
 
18,869,370
  
Shopping Centers 5.9%
 
410,400
  
Kimco Realty Corp.
  
8,281,872
(a)
 
392,996
  
Urstadt Biddle Properties, Inc. Class A
  
8,229,336
(a)
 
16,511,208
  
Specialty 2.5%
 
100,000
     
EPR Properties
  
7,185,730
  
             
Total Common Stocks
 (Cost $208,473,523)
219,563,333
  
     
Preferred Stocks 61.0%
 
Commercial Financing 3.3%
 
185,000
  
iStar, Inc., Ser. G, 7.65%
  
4,667,550
(a)
 
185,000
  
iStar, Inc., Ser. I, 7.50%
  
4,626,850
(a)
 
9,294,400
  
Data Centers 2.5%
 
250,000
  
DuPont Fabros Technology, Inc., Ser. C, 6.63%
  
7,050,000
(a)
                  
Diversified 8.4%
 
444,484
  
Colony NorthStar, Inc., Ser. B, 8.25%
  
11,387,680
(a)
 
481,000
  
Colony NorthStar, Inc., Ser. I, 7.15%
  
12,332,840
(a)
 
23,720,520
  
Free Standing 0.9%
 
100,000
  
National Retail Properties, Inc., Ser. F, 5.20%
  
2,490,000
(a)
             
Home Financing 2.9%
 
325,000
  
Annaly Capital Management, Inc., Ser. F, 6.95%
  
8,076,250
  
             
Industrial 3.4%
 
190,500
  
Rexford Industrial Realty, Inc., Ser. A, 5.88%
  
4,897,755
(a)
 
175,000
  
STAG Industrial, Inc., Ser. C, 6.88%
  
4,688,250
  
 
9,586,005
  
Lodging/Resorts 9.9%
 
329,000
  
Ashford Hospitality Trust, Inc., Ser. G, 7.38%
  
8,225,000
(a)
 
185,800
  
Eagle Hospitality Properties Trust, Inc., Ser. A, 8.25%
  
19
*(b)(c)
 
399,300
  
Pebblebrook Hotel Trust, Ser. D, 6.38%
  
10,166,178
(a)
 
165,000
  
Sunstone Hotel Investors, Inc., Ser. E, 6.95%
  
4,405,500
  
 
200,000
  
Sunstone Hotel Investors, Inc., Ser. F, 6.45%
  
5,152,000
  
 
27,948,697
  
 
 
See Notes to Schedule of Investments
 

Schedule of Investments Real Estate Securities Income Fund Inc.
(Unaudited) (cont'd)
 
 
NUMBER OF
SHARES
VALUE†
  
     
Office 5.3%
  
 
6,000
  
Highwoods Properties, Inc., Ser. A, 8.63%
$
7,670,625
(a)
 
277,400
  
SL Green Realty Corp., Ser. I, 6.50%
  
7,248,462
(a)
 
14,919,087
  
Regional Malls 9.7%
  
 
273,015
  
CBL & Associates Properties, Inc., Ser. D, 7.38%
  
6,555,090
(a)
 
185,000
  
CBL & Associates Properties, Inc., Ser. E, 6.63%
  
4,451,100
  
 
233,800
  
Pennsylvania Real Estate Investment Trust, Ser. C, 7.20%
  
6,265,840
(a)
 
200,000
  
Taubman Centers, Inc., Ser. J, 6.50%
  
5,062,000
(a)
 
200,000
  
Washington Prime Group, Inc., Ser. H, 7.50%
  
5,080,000
(a)
 
27,414,030
  
Self Storage 3.0%
  
 
40,000
  
Public Storage, Ser. E, 4.90%
  
983,600
(a)
 
275,000
  
Public Storage, Ser. Y, 6.38%
  
7,595,500
(a)
 
8,579,100
  
Shopping Centers 5.8%
  
 
203,233
  
Cedar Realty Trust, Inc., Ser. B, 7.25%
  
5,170,044
(a)
 
250,000
  
DDR Corp., Ser. K, 6.25%
  
6,365,000
(a)
 
99,000
  
Saul Centers, Inc., Ser. C, 6.88%
  
2,525,490
(a)
 
90,000
  
Urstadt Biddle Properties, Inc., Ser. G, 6.75%
  
2,335,500
(a)
 
16,396,034
  
Single Family Homes 5.9%
  
 
150,000
  
American Homes 4 Rent, Ser. B, 5.00%
  
4,275,000
(a)
 
100,000
  
American Homes 4 Rent, Ser. C, 5.50%
  
2,820,000
(a)
 
134,000
  
American Homes 4 Rent, Ser. D, 6.50%
  
3,598,570
  
 
116,700
  
American Homes 4 Rent, Ser. F, 5.88%
  
2,993,355
(a)
 
114,400
  
American Homes 4 Rent, Ser. G, 5.88%
  
2,877,160
  
 
16,564,085
  
Total Preferred Stocks
 (Cost $162,904,319)
172,038,208
  
     
Short-Term Investment 0.7%
  
   
Investment Company 0.7%
  
2,084,810
  
State Street Institutional U.S. Government Money Market Fund Premier Class, 0.94% (Cost  $2,084,810)
  
2,084,810
(d)
           
Total Investments 139.5%
 (Cost $373,462,652)
  
393,686,351
##
       
Liabilities Less Other Assets (39.5)%
  
(111,443,338)
  
       
Net Assets Applicable to Common Stockholders 100.0%
$
282,243,013
  
 
*
  
Non-income producing security.
(a)
  
All or a portion of this security is pledged with the custodian in connection with the Fund's loans payable outstanding.
(b)
  
Illiquid security.
(c)
  
Defaulted security.
(d)
  
Represents 7-day effective yield as of July 31, 2017.
 
See Notes to Schedule of Investments
 
Schedule of Investments Real Estate Securities Income Fund Inc.
(Unaudited) (cont'd)
    
  
The following is a summary, categorized by Level (see Notes to Schedule of Investments), of inputs used to value the Fund's investments as of July 31, 2017:
           
Asset Valuation Inputs
  
    Level 1     Level 2     Level 3     Total  
Investments:
                        
Common Stocks(a)
  
$
219,563,333
    
$
—
    
$
—
    
$
219,563,333
  
Preferred Stocks
                                
Lodging/Resorts
    
27,948,678
      
19
      
—
      
27,948,697
  
Office
    
7,248,462
      
7,670,625
      
—
      
14,919,087
  
Other Preferred Stocks(a)
    
129,170,424
      
—
      
—
      
129,170,424
  
Total Preferred Stocks
    
164,367,564
      
7,670,644
      
—
      
172,038,208
  
Short-Term Investment
    
—
      
2,084,810
      
—
      
2,084,810
  
Total Investments
  
$
383,930,897
    
$
9,755,454
    
$
—
    
$
393,686,351
  
   
 
(a)
  
The Schedule of Investments provides information on the industry categorization for the portfolio.

As of the period ended July 31, 2017, no securities were transferred from one level (as of October 31, 2016) to another.
 
 
 
 
 
 
See Notes to Schedule of Investments

July 31, 2017
Notes to Schedule of Investments (Unaudited)
 
†
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 certain preferred stocks, 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, securities within the same industry with recent highly correlated performance, trading in futures or American Depositary Receipts 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 are normally translated from the local currency into U.S. dollars using the exchange rates as of 4:00 p.m. Eastern Time on
 
 
 
For information on the Fund's significant accounting policies, please refer to the Fund's most recent stockholder reports.
 
days the New York Stock Exchange is open for business. The Board has approved the use of Interactive Data Pricing and Reference Data LLC ("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 time as of which a Fund's share price is calculated, 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.
 
 
##
At July 31, 2017, the cost of investments for U.S. federal income tax basis was $373,017,395. Gross unrealized appreciation of investments was $37,224,083 and gross unrealized depreciation of investments was $16,555,127 resulting in net unrealized appreciation of $20,668,956 based on cost for U.S. federal income tax purposes.
 


 
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:  September 29, 2017
 
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:  September 29, 2017
 
By:
 /s/ John M. McGovern
  
 
John M. McGovern
  
 
Treasurer and Principal Financial
  
 
and Accounting Officer
  

Date:  September 29, 2017