I had to go to my cold storage to get some info from the historical files I had on GRT.
I decided to sell because this may be the begnning of the end of the upside for GRT during this cycle. This large ppty sale will be consummated in AUG. I suspect the reaoning is that it will be very dilutive once done. Remember the last qtr earnings report came in way more dilutive than expected as it related to the prfd for common share swapout. I suspect this transaction will put GRT dangerously closer in terms of ffo to dividend coverage.
Also, when I was flat out refused a ppty list and told that list would not be available until AUG my antenna went up immediately. I reviewed the 60 or so community center assets. There are a lot of dogmeat dink centers in there but there are some very good centers that should be held. Given my calculation of sq ft sold divided by number of centers sold shows average sq ft sold of 145K I suspect that a lot of the better centers were sold this round leaving a lot of the poopy centers for subsequent sale.
Finally, last month I sold 8K shares of GRT at $18 and change. I bought more MLS as if I didn't already own enough at average $26.98. Now MLS near $30 and GRT over $19. I have made in paper the equivalent of several years of the dividend differential from that swap and have a better ROI. The other mall reits have responded in kind with GRT the laggard.
GRT's toughest job is before them now that they have made the big sale that I believe is very dilutive. What to do with the money. Problem number one, no cheap malls to purchase unless you want to buy a dog like PA mutual bought the other day at an 11 cap. PA mutual has plenty of time to turn that mall around and plenty of funds to do capex.
GRT would have to find something more accretive than simply buying back their own common stock which I don't think is possible. Therefore the best use of the money would be to buyin common stock. But I don't think they are interested in doing that. Developmt staff laid off last qtr because nothing I repeat nothing in the developmt pipeline. So fire up the pipeline but that's 2+ years away from contributing.
Skelly you are welcome to run the scenerios out going forward but when the best use of proceeds is to buy in your own stock rather than acquire and/or develop..... I don't know. Note I am not considering income tax implications in this transaction and reality may dictate a tax free exchange even if it isn't the best use of funds.
I had a remarkable ride on this baby but I believe the capital appreciation part is done for the forseeable future. I see not catalyst to growth.
Good luck Skelly and all. I can be found on the MLS board. I have made major bets and increased my bet last month that MLS will be a high $30s stock in two years. Time will tell but my guess is that MLS's total return will be far superior to holding GRT. JMHO.
I don't feel bad. My motto is that one is better off leaving the last 10% on the table rather than take the downside risk. In this case I hardly think that GRT will get to $21 which would be that last 10%.
GRT has some very interesting challenges going forward. I will be looking in from time to time as the events unfold. I will be curious to see how dilutive this final big sale will be and how close revised ffo will be to the dividend. GRT has been doing an able job of trying to matchup the growth of ffo from the Polaris to asset sales but this big one may be occurring ahead of their own timeline but could not pass up an opportunity to sell a big base of assets all at once rather than the more painful onsie twosie approach.