A dividend cut is inevitable because of the new share offering which was dilutive. Uncertainty as to the size of this cut is what is holding down the share price. Clarity will be provided by the dividend announcement in a couple of weeks. If dividend cut is less than expected, the shares should be able to maintain their current price or even advance a bit. If the cut is larger than expected the share price will fall to a level that continues to reflect uncertainty, most likely a level at which it again will yield what it currently yields. Until this is clarified, don't look for appeciation, even in this red hot environment for REITS.
"A dividend cut is inevitable because of the new share offering which was dilutive."
this point has been covered here before and no, it is not at all inevitable, at least as things stand now earnings last quarter were more than adequate to cover the dividend, which would appear to be the case going forward as well -- there was a comfortable margin and earnings last qtr were already based on diluted shares from the offering in sep
a couple of points that imo create uncertainty:
their heavy debt load, which the share offering and the recent sale of a majority interest in 2 properties did rather little to alleviate
they sold a majority interest in 2 prime properties, which will reduce their FFO (by more than half) from those properties going forward -- this of course may have influence on the common dividend
personally I think the market is more worried about an additional capital raise rather than the one that just happened (in sep @ 3.75/share)
properties may also be underwater for some it is more like are, not "may" and sinking further all the time so they cannot refinance in the amounts needed this is also likely a problem could be a big + growing problem
<personally I think the market is more worried about an additional capital raise rather than the one that just happened (in sep @ 3.75/share)>
I think this is spot on except that the uncertainty is with the economy. No one knows how long it will be before raising mortgage debt will be based on "normal" underwriting. Right now commercial real estate is stigmatized regardless of its ability to carry a reasonable debt.
GRT's properties under "normal" underwriting standards should be easy to refinance. In this environment debt is like having AIDS. No one really wants to get near you.
If and when that changes, GRT price per share would rise dramatically.