Strange that it would be down so much in one day (4%). I'd expect that of a tech stock, not a REIT with a 7% dividend. Dividend is now 7.3%.
Sentiment: Strong Buy
If rates are rising it means a better economy, which means property values of all types will rise along with inflation, including the properties own by REITS, and so will rents. These are the stuff higher stock prices are made of.
But there are no rising interest rates. A ten year 2.8% is not whopping. 5% 0r 6% yes. Fine, I am happy to buy higher payouts here at lower PPS. The CD market would have to skyrocket before it would interest me or others. When a CD pays 5%, give me call. SNH has a sound business model. As long as the properties do well, they do well. They don't need to constantly buy properties. They have good management.
The drop is mainly due to rising interest rates. You should be watching this closely. For example, look at high yielding stocks today. They are going down. The ten year note is up a whopping 2.8% today. For this particular company, rising interest rates means it is more expensive for them to do business. But for high dividend payers in general (I put SNH in this category), they go down as interest rates rise. This is because it is safer to buy CD's or other fixed income vehicles that pay higher interest than stocks which are riskier. Of course interest rates are still low historically, but the market looks forward. Best to hedge your self with investment vehicles that rise with interest rates. Think banks (they are having a great day today). There are others also, look at TBF and TBT. Investors seeking yield because they are retired are going to have to shift gears a little to protect themselves because are now mainly in high dividend stocks.
Considering this is first major deal for Portnoy's after loosing control of CWH I am not impressed. SIR and SNH are both down significantly since the deal was announced. The market does not like the deal because it is not good for current shareholders. If you like SNH I would recommend MPW (medical reit) which pays are 6.2% dividend and seems to be able to source deals that are accretive at much better prices. I purchased SNH on Tuesday after seeing the price decline then had buyers remorse and unloaded. Aren't you troubled that SNH management has not explained the rationale for their portion of the deal ? Most legit management teams put out announcement immediately following a major deal.
It probably wasn't a coincidence. The deal was probably structured to be neutral to SIR. Maybe it is low compared to other acquisitions, but I am guessing SNH saw it as an oppotunity to lock in a large deal with long term, high quality tenants. If they had to go out and put together separate transactions, they would have spent a lot more time and money.
The transaction will be accretive if their future funding is anything like their other funding in 2014. They issued notes at 3.25% and 4.75% in April...and in May, they got a loan at LIBOR plus 140 basis points (about 2%). But right now, Wall Street doesn't like the deal.
Funny how all of a sudden you think SNH management is lacking the knowledge on a correct purchase and now with no comments before scream SELL FOOLS rush investment decision while thoughful investors are willing to trust managements have have proven track records!
Recent acquisitions by other medical REITS have been at higher cap rates up to 8%, meaning SNH may have overpaid by up to $100Million, the same loss in the companies market value today. Notice that SNH has not said this would be accretive.
I agree overall, until the potential 2ndary issue is resolved, shares will be flattish, they have been under performing anyway. it has been puzzling to me, tug of war as market struggles w diversification strategy. I would wait to add you might get $21.50-$22 opp soon if volatility picks up this week or w a strong jobs number Friday and interest rate spike..
Right there with you in the age group, msftgo. I'm also long nursing home REITs since that need will only increase as we boomers get even older. SNH didn't like being so dependent on facilities that relied on Medicare and Medicaid as a big piece of their revenue source, so they got out of long term care. I think that makes SNH more conservative. Maybe some day Wall Street will see it that way.
The boomers keep getting older every day. I know I'm one of them and starting in the mid sixties you need more care from doctors. I don't like it, but old age catches up to you; my wife is also have more medical problems now. I believe it is a good purchase!!
Sentiment: Strong Buy
Glad to see most comments are positive and being a LONG in this stock happy to see all of these comments on normally quiet board!