At one time, REITs found convertible bonds to be a good source of capital. Now, though, their conversion dates are coming due, and for some REITs, this may pose unexpectedly large liabilities. Convertible bonds typically allow investors every five years to convert the bond into stock or tender for repayment at face value. The latter is a likely scenario in the current market, REIT analyst Steven Marks says. "So many are so far out of the money that they're likely to get put back to the companies," he says.

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