N-Q 1 nq.htm nq.htm
As filed with the Securities and Exchange Commission on April 1, 2011
 
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)
c/o Neuberger Berman Management 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
c/o Neuberger Berman Management LLC
Neuberger Berman Real Estate Securities Income Fund Inc.
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, 2011
 
Date of reporting period: January 31, 2011
 
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, 2011


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

 

 
NUMBER OF SHARES
 
VALUE($)
Common Stocks (79.4%)
 
Apartments (6.4%)
 
147,475
 
American Campus Communities
   
4,769,341
 
33,900
 
AvalonBay Communities
   
3,930,027
 
33,700
 
Essex Property Trust
   
3,909,200
 
67,201
 
Mid-America Apartment Communities
   
4,284,064
 
 
16,892,632
 
Commercial Financing (2.6%)
 
409,423
 
Apollo Commercial Real Estate Finance
   
6,726,820
 
Diversified (8.1%)
 
89,200
 
Digital Realty Trust
   
4,852,480
 
167,550
 
Entertainment Properties Trust
   
7,712,326
 
63,599
 
Vornado Realty Trust
   
5,602,436
 
105,100
 
Washington Real Estate Investment Trust
   
3,224,468
 
 
21,391,710
 
Health Care (10.9%)
 
267,300
 
HCP, Inc.
   
9,914,157
 
42,700
 
Health Care REIT
   
2,095,716
 
422,200
 
OMEGA Healthcare Investors
   
9,406,616
 
130,352
 
Ventas, Inc.
   
7,229,322
 
 
28,645,811
 
Home Financing (6.2%)
 
376,500
 
Annaly Capital Management
   
6,712,995
 
433,100
 
Starwood Property Trust
   
9,749,081
 
 
16,462,076
 
Industrial (8.0%)
 
282,900
 
AMB Property
   
9,491,295
 
102,222
 
EastGroup Properties
   
4,455,857
 
470,400
 
ProLogis
   
7,018,368
 
 
20,965,520
 
Mixed (1.7%)
 
130,800
 
Liberty Property Trust
   
4,547,916
 
Office (10.0%)
 
46,000
 
Boston Properties
   
4,341,020
 
593,700
 
Brandywine Realty Trust
   
6,886,920
 
152,380
 
Highwoods Properties
   
4,993,493
 
86,777
 
Mack-Cali Realty
   
3,038,930
 
363,300
 
Piedmont Office Realty Trust
   
7,186,074
 
 
26,446,437
 
Real Estate Management & Development (3.1%)
 
458,000
 
Brookfield Properties
   
8,056,220
 
Regional Malls (10.4%)
 
237,500
 
CBL & Associates Properties
   
4,051,750
 
287,814
 
General Growth Properties
   
4,262,525
*
307,778
 
Macerich Co.
   
14,976,478
 
40,761
 
Simon Property Group
   
4,135,203
 
 
27,425,956
 
Self Storage (3.0%)
 
208,701
 
Sovran Self Storage
   
8,022,467
 
 
Shopping Centers (9.0%)
 
171,100
 
Equity One
   
3,191,015
   
42,300
 
Federal Realty Investment Trust
   
3,402,189
 
404,300
 
Kimco Realty
   
7,313,787
 
127,064
 
Regency Centers
   
5,477,729
 
163,670
 
Tanger Factory Outlet Centers
   
4,273,424
 
 
23,658,144
 
Total Common Stocks
(Cost $152,799,390)
 
209,241,709
 
   
Preferred Stocks (67.8%)
 
Apartments (2.6%)
 
138,000
 
Apartment Investment & Management, Ser. T
   
3,485,880
 
129,040
 
Apartment Investment & Management, Ser. U
   
3,241,485
 
 
6,727,365
 
Commercial Financing (8.4%)
 
131,915
 
iStar Financial, Ser. E
   
2,458,896
 
185,000
 
iStar Financial, Ser. G
   
3,370,700
 
185,000
 
iStar Financial, Ser. I
   
3,385,500
 
605,000
 
NorthStar Realty Finance, Ser. B
   
13,031,700
 
 
22,246,796
 
Diversified (9.8%)
 
160,600
 
Cousins Properties, Ser. B
   
3,897,762
 
302,000
 
DuPont Fabros Technology, Ser. A
   
7,562,080
 
580,000
 
Lexington Realty Trust, Ser. B
   
14,413,000
 
 
25,872,842
 
Health Care (11.7%)
 
402,283
 
Health Care REIT, Ser. D
   
10,298,445
 
279,090
 
LTC Properties, Ser. F
   
7,088,886
 
524,722
 
OMEGA Healthcare Investors, Ser. D
   
13,485,355
 
 
30,872,686
 
Lodging (8.1%)
 
370,000
 
Ashford Hospitality Trust, Ser. D
   
8,646,900
 
260,800
 
Eagle Hospitality Properties, Ser. A
   
396,416
*
179,900
 
Hersha Hospitality Trust, Ser. A
   
4,472,314
 
81,700
 
Hospitality Properties Trust, Ser. B
   
2,105,409
 
170,000
 
Lasalle Hotel Properties, Ser. G
   
4,061,300
 
65,900
 
Sunstone Hotel Investors, Ser. A
   
1,588,190
 
 
21,270,529
 
Manufactured Homes (0.2%)
 
19,600
 
American Land Lease, Ser. A
   
389,060
 
Office (10.4%)
 
100,000
 
Brandywine Realty Trust, Ser. C
   
2,491,000
 
80,000
 
Brandywine Realty Trust, Ser. D
   
1,970,400
 
31,450
 
Corporate Office Properties Trust, Ser. H
   
777,759
 
6,000
 
Highwoods Properties, Ser. A
   
5,904,375
 
478,000
 
Parkway Properties, Ser. D
   
11,902,200
 

See Notes to Schedule of Investments

 
 

 

JANUARY 31, 2011


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

 

NUMBER OF SHARES
 
VALUE($)
100,000
 
SL Green Realty, Ser. C
   
2,485,000
 
73,200
 
SL Green Realty, Ser. D
   
1,830,732
 
 
27,361,466
 
Regional Malls (14.2%)
 
528,000
 
CBL & Associates Properties,   Ser. D
   
12,518,880
 
98,000
 
Glimcher Realty Trust, Ser. F
   
2,471,560
 
523,400
 
Glimcher Realty Trust, Ser. G
   
12,723,854
 
151,300
 
Taubman Centers, Ser. G
   
3,868,741
 
232,700
 
Taubman Centers, Ser. H
   
5,861,713
 
 
37,444,748
 
Shopping Centers (2.4%)
 
120,000
 
Cedar Shopping Centers, Ser. A
   
3,044,400
 
9,000
 
Developers Diversified Realty, Ser. G
   
223,740
 
11,550
 
Developers Diversified Realty, Ser. H
   
268,653
 
123,900
 
Developers Diversified Realty, Ser. I
   
2,909,172
 
 
6,445,965
 
Total Preferred Stocks
(Cost $185,984,791)
 
178,631,457
 
   
Short-Term Investments (1.1%)
 
2,852,913
 
State Street Institutional Liquid Reserves Fund Institutional Class (Cost $2,852,913)
 
 
 
2,852,913
 
 
       
Total Investments (148.3%) (Cost $341,637,094)
 
390,726,079
##
       
Liabilities, less cash, receivables and other assets [(19.8%)]
 
(52,070,667)
@@ØØ
Liquidation Value of Auction Market Preferred Shares [(28.5%)]
 
(75,200,000)
 
         
Total Net Assets Applicable to Common Shareholders (100.0%)
 
 
                
$        263,455,412
 

See Notes to Schedule of Investments

 
 
 

 
 
January 31, 2011 (Unaudited)

Notes to Schedule of Investments (Unaudited)

In accordance with Accounting Standards Codification (“ASC”) 820 “Fair Value Measurements and Disclosures” (“ASC 820”), all investments held by Neuberger Berman Real Estate Securities Income Fund Inc. (the “Fund”) are carried at the value that Neuberger Berman Management 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 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)

 
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, for which market quotations are readily available, is generally determined by Management by obtaining valuations from an independent pricing service based on the latest sale price quoted in active markets (Level 1 inputs). 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. The value of the Fund’s investments in interest rate swap contracts is determined by Management by obtaining valuations from independent pricing services which are based on multiple broker quotes (generally Level 2 inputs). The value of the Fund’s investments in 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 State Street Institutional Liquid Reserves Fund Institutional Class are valued using the fund’s daily calculated net asset value (“NAV”) per share.

 
For equity securities and interest rate swap contracts, 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, the Fund seeks to obtain quotations from principal market makers (generally considered Level 3 inputs). If such quotations are not readily available, the security is valued using methods the Fund’s Board of Directors (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 based on Level 2 or 3 inputs, 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.


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

 


 
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 translated daily 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 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 (Level 2 inputs). 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. These 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, 2011:
 
Asset Valuation Inputs
 
Investments:
 
Level 1
 
 Level 2
 
 Level 3
 
Total
Common Stocks^
 
$   209,241,709
 
$                      —
 
$            —
 
$   209,241,709
Preferred Stocks
               
 
Apartments
 
6,727,365
 
 
 
6,727,365
 
Commercial Financing
 
22,246,796
 
 
 
22,246,796
 
Diversified
 
25,872,842
 
 
 
25,872,842
 
Health Care
 
30,872,686
 
 
 
30,872,686
 
Lodging
 
20,874,113
 
396,416
 
 
21,270,529
 
Manufactured Homes
 
389,060
 
 
 
389,060
 
Office
 
21,457,091
 
5,904,375
 
 
27,361,466
 
Regional Malls
 
37,444,748
 
 
 
37,444,748
 
Shopping Centers
 
6,445,965
 
 
 
6,445,965
Total Preferred Stocks
 
172,330,666
 
6,300,791
 
 
178,631,457
Short-Term Investments
 
 
2,852,913
 
 
  2,852,913
Total Investments
 
$   381,572,375
 
$          9,153,704
 
$            —
 
$   390,726,079

 
^  The Schedule of Investments provides information on the industry categorization for the portfolio.
 
The Fund had no significant transfers between Levels 1 and 2 during the period ended January 31, 2011.
 
Liability Valuation Inputs
 
The following is a summary, categorized by Level, of inputs used to value the Fund’s derivatives as of January 31, 2011:
 

   
Level 1
 
Level 2
 
Level 3
 
Total
                 
Interest rate swap contracts
$
$
(5,635,513)
$
$
(5,635,513)

##
At January 31, 2011, the cost of investments for U.S. federal income tax purposes was $341,890,889. Gross unrealized appreciation of investments was $60,649,809 and gross unrealized depreciation of investments was $11,814,619, resulting in net unrealized appreciation of $48,835,190 based on cost for U.S. federal income tax purposes.

ØØ
At January 31, 2011, the Fund had deposited $6,500,000 in a segregated account for interest rate swap contracts.

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


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

 


@@ 
  At January 31, 2011, 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%
.260%(1)
$(302,130)
$(5,333,383)
$(5,635,513)
 
(1) 30 day LIBOR (London Interbank Offered Rate) at January 31, 2011.
 
 
 
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, 2011
 
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, 2011
 
By:      /s/ John M. McGovern                                   
John M. McGovern
Treasurer and Principal Financial
and Accounting Officer

Date: March 31, 2011