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Glimcher Realty Trust Message Board

  • reitinvestor38 reitinvestor38 Jan 18, 2009 9:11 AM Flag

    Cash Flow can be used for Debt Refinancing

    Unlike GGP, GRT has a much better chance of refinancing its 2009 and 2010 Maturities because of operating cashflow is roughtly the same as its debt maturities.

    GRT annual cashflow exceeds 100M a year. Its debt maturities are roughly in this same range.

    GRT will probably be required by lenders to increase its equity in this malls.

    It is unlikely GRT will be required fund 100% of this debt. More likely lenders will require a LTV of 60-75%. At the peak of the liquidity crisis, the worst performing asset of GRT's portfolio was sold for 20M with a loan of 30M. A 40% equity cushion is more than sufficient would protect the lender.

    For 2009 and 2010, I would anticipate 40M of the 100M Operating Cashflow each year to go towards paying down debt.

    This would leave 60M for prefered and common shares. Short term dividend will be under presure. I'm assuming GRT would postpone CAPX expenses and get a refinance on their line of credit at the end of 2010.

    The liquidity crisis should be over by 2010. GRT should be able to surive at which point todays investors will have a 40+% divident yield in exchange for risking 2009 and 2010 dividend reduction.

    I'm long on GRT.

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    • Believe this guy at your own risk, GRT investors. I don't believe his analysis is sound.

      #1 - This guy is assuming that Glimcher's cash flows are the same in 2009 as they were in 2008. Do you honestly believe cash flows will hold up with retailers filing for bankruptcy and renegotiating rents? 2008 cash flows will take a haircut.

      #2 - He is assuming that GRT won't have to pay its debtors and it will be OK. It's called Chapter 11, my friend, and the stock will go to $0.

      #3 - His quasi cash flow analysis is ignoring interest expense on the company's massive debt burden. GRT pays about $80 million a year on interest expense, on top of its debt maturities. They've got to pay interest, too, and any lender will include interest expense in any debt service calculation.

      This company is not cash flow positive with all of its debt and deteriorating cash flows. Dividends will be paid in dilutive shares, debts will need to be paid or else the Company goes bankrupt. Playing the common stock here is just ridiculous, and moving up on the capital structure is stil quite dangerous. You all are much better off with the cash underneath your mattress.

    • Don't expect a dividend payment in 2009.

      If you have the guts to buy this pos, you better be thinking
      long term. When they eliminate the dividend, this pos will
      be under $2, and no lender will so biz with them.

      Good luck to you and your hope for a 40% dividend.

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